Jerrold Holdings was rebranded as Together last year. On Wednesday, Bracken Midco1, which will become Together’s parent company once the new bonds are sold, began marketing £220m of five year non-call two senior unsecured payment-in-kind notes.
Together’s majority shareholder, the Moser family, intends to activate its preferred option and add the stakes of the company’s two other minority owners, Equistone and Standard Life, which want to leave Together.
The two private equity firms made known their plans in mid-September, Together said in a statement, “ in line with the typical tenure and nature of such investments and given the continued strong performance of the Company.”
Some senior members of the mortgage lender’s management team still hold small stakes in it, but they have no voting rights.
Credit Suisse is the lead left on the new PIK deal and global coordinator with JP Morgan. Barclays, HSBC, Lloyds, Natixis and Royal Bank of Scotland are bookrunners.
“We believe the transaction has no material consequences for Together's business, risk position, and funding model, but increases the leverage of the group, formed by Jerrold Holdings and its various non-operating holding societies,” Standard & Poor’s said on Wednesday.
The agency also lowered Jerrold Holdings’ ratings from BB- to B+, and assigned ratings of B to the proposed PIK notes.
Proceeds will fund the buyout of Equistone and Standard Life, the repurchase of 30,000 D shares from some management members, and a £25m loan to repay shareholder debt.
The PIK notes will be secured by a pledge over issued capital stock in Midco2 and all intercompany loans by Bracken Midco1. They will not be guaranteed by the company or any of its subsidiaries.
Together has already been in the market this year. On September 30, it sold a £375m five year non-call two senior secured bond with a 6.25% coupon and a 605bp spread over the 3.75% 2021 Gilt.
The bond was used to repay its old £300m note due 2018, which has a coupon of 9.75%.