LONDON, April 2 (IFR) - Oilfield services company KCA Deutag
is considering downsizing its planned high yield bond issue
after investors demanded a higher price than the company had
expected to pay to refinance loans, a banking source close to
the situation said on Tuesday.
The company is now considering leaving some of its existing
loans in place, but a formal announcement is expected later
There were a number of US accounts that had asked for a
premium on the USD860m 7NC3 bond due to potential volatility in
the company's operations in Iraq and Algeria, the source said.
Unofficial price talk was heard last week around low 8% for the
B3 rated senior secured bond, but the source said pricing
discussions were wide of that.
JP Morgan is left lead on the deal, and BAML, HSBC, Lloyds
and Morgan Stanley are also bookrunners.
Pricing was expected last week following a US roadshow that
was held March 18-22, which was followed by a two-day European
roadshow which finished last Wednesday.
The source said the bond was more likely to price next week
rather than this week. That is because the company will need
consent from lenders to leave existing loans in place.
KCA Deutag is owned by Pamplona Capital Management together
with funds and accounts managed by GoldenTree Asset Management,
EIG Global Energy Partners, and BlackRock Financial Management.
Pamplona is the largest shareholder and has a majority on the
In March 2011 the company completed a refinancing which
included a USD550m shareholder equity injection, of which
USD300m was used to pay down senior debt and USD250m to further
develop the business.