(Bloomberg) -- A $1.65 billion bond sale to help fund R.R. Donnelley and Sons Co.’s planned acquisition of Valassis Communications Inc. is set to price Tuesday after investor protections were bolstered, according to people familiar with the matter.
Pricing discussions on $1 billion of senior secured notes call for a yield between 9.5% and 9.75%, said the people, who asked not to be identified because the information is private. A $650 million second-lien bond is poised to price 150 basis points above the first-lien note, they also said. JPMorgan Chase and Co. and Apollo Global Management Inc.’s capital markets arm are leading the transaction.
In recent days, the company has added new language to the bond covenants to prevent so-called creditor-on-creditor violence, the people said. Before that, standard blocker language that prohibit asset transfers, the use of unrestricted subsidiaries and other coercive tactics was included, they added.
Financing for R.R. Donnelley’s purchase of the print-and-digital marketing business of Vericast Corp. includes a privately placed $650 million loan as well. Apollo is the anchor order on that loan, which is open to a handful of other lenders, the people said. Pricing discussions are 475 basis points over the Secured Overnight Financing Rate, offered a discounted 97 cents on the dollar, one of the people said.
The tranche sizes could change depending on investor demand and company preference, the people said.
JPMorgan and Apollo declined to comment. R.R. Donnelley didn’t respond to requests for comment.
Bloomberg News reported earlier this month that R.R. Donnelley was expected to launch a $2.3 billion sale of loans and bonds to fund the Valassis purchase, including an $800 million leveraged loan. That part of the expected deal was pulled last week, with the privately placed loan emerging instead.
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