NEW YORK, June 13 (IFR) - Yankee Candle called off plans
Thursday to raise $1.4 billion in fresh capital, withdrawing a
bond issue and term loan amid tough and volatile conditions in
the US financing markets.
The Massachusetts-based candle-maker withdrew its $450
million five-year senior unsecured bond and pulled a $950
million concurrent term loan, sources told IFR.
It was the second setback in as many months for Yankee, a
leader in the scented candle business which had been on the
block for sale by its private equity owner Madison Dearborn.
But the buyout firm nixed the sale in May after failing to
secure the offer it had wanted for Yankee, which posted a $90.4
million gross profit in the first quarter of 2013.
It was also the second time this week that a high-yield deal
has been pulled from the market, which has been wracked by worry
about the spike in Treasury rates as well as fears that the
Federal Reserve could soon wind down its economic stimulus plan.
Independent energy company Warren Resources on Monday
postponed an USD200m eight-year non-call four senior notes
offering via BMO sole bookrunner, citing market conditions.
Since the end of May, the bond markets have been selling off
on worries about rising rates, which has kept many would-be
issuers of new debt on the sidelines.
Surprisingly to some, Yankee decided to test the waters
anyway - and to do so with a dividend deal, aimed at using much
of the new money to reward the owners.
Dividend deals are often among the most aggressive deals in
the high-yield bond market, and Yankee's proposed bond was
viewed as a test of current investor appetite for risk.
"Yankee getting pulled was not so much an issue with the
market - it was just that it shouldn't have launched in the
first place," said one banker who asked not to be named.
"Investors are still there but are being very thoughtful.
They want things to look cheap, but when they do, they are
certainly willing to go all in."
Barclays and Bank of America Merrill Lynch were joint
bookrunners on the Yankee Candle bond deal, which was launched
It was structured as five-year notes, callable immediately
at 101.5 through the end of year two, at par + 1/2 coupon
through year three, at par + 1/4 coupon through year four, and
at par through year five.
S&P has assigned a CCC+ rating to the Yankee offering, with
Moody's putting them at Caa1 - both ratings well into the
junk-bond end of the credit spectrum.
New issues of junk and investment-grade bonds alike have
been reined in over the past few days, as Treasury yields have
touched their highest levels in 14 months.
That has marked an abrupt U-turn for the bond markets, which
had been white-hot for months, allowing companies to sell debt
at historically low coupon (interest) rates.
But as rates have risen, investors have become decidedly
"There are some other aggressive deals like Yankee that were
on the launch pad," the banker said. "But these have not