Deutsche Bank pulled a $500 million high-yield offering from Case New Holland Monday, shortly before the priced transaction was set to close. The 11th hour about-face comes on the back of CNH’s recent filing of a Form 6-K that disclosed information considered adverse to bondholders. Deutsche Bank had been facing mounting pressure from investors, led by AIG and Vanguard Group, to cancel the deal or change its terms in light of the filing. The bonds were originally priced on May 4. David Flannery, head of high-yield capital markets at Deutsche Bank, and Ted Meyer, spokesman, did not return calls by press time. A call to Michel Lecomte, cfo at CNH in Lake Forest, Ill., was referred to Jeffrey Walsh, spokesman. He did not return calls either.
Bryan Petermann, high-yield portfolio manager at AIG in Houston who headed up the investor discussion on the deal, declined comment. Spokesmen from Vanguard did not return calls.
Investors were informed earlier today that the deal had been cancelled. The controversy was sparked by the 6-K, filed last Thursday, which stated that CNH’s cash flows from its guarantor subsidiaries were lower than had been expected. This was of particular concern for investors because the transaction was sold as a drive-by and did not have a roadshow or formal presentation, which led to investors being caught off-guard. One buyer who participated in the deal said investors were mixed over whether they wanted the cancellation or re-pricing of the deal. Eventually, Deutsche Bank “did the right thing” by pulling it, he added.
