Compass Diversified circulates price guidance for $750M bond offering

Compass Diversified Holdings LLC has set price talk for a $750 million offering of eight-year (non-call three) senior unsecured notes at 5.25%-5.50%, sources said. Books for the deal will close today at 3 p.m. ET, with pricing expected thereafter via joint bookrunners BofA Securities (left), Morgan Stanley, Jefferies, J.P. Morgan, TD Securities and U.S. Bancorp.

Net proceeds, together with borrowings from a concurrent refinancing transaction, will be used to repay debt under the company's existing credit facilities and to redeem its 8% senior notes due 2026.

Assigned issue ratings are B+/B1, with a 4 recovery rating at S&P Global Ratings. Moody’s on March 2 also assigned a Ba1 rating to the company's proposed new $600 million senior secured revolving facility due 2026.

Ratings on Feb. 25 revised the outlook on Compass Group to stable, from negative, and affirmed the B+ issuer credit rating. The company's senior unsecured notes were raised to B+, from B, on improved recovery prospects. The BB rating on the company's revolver was also affirmed.

Ratings said it expects that the company's loan-to-value ratio will remain 30%-45% and its investee companies will continue to be able to make interest payments on their intercompany loans, covering Compass Group's operating expenses by above 0.7x.

Compass Diversified Holdings is a Westport, Conn.-based private equity firm specializing in acquisitions, buyouts, industry consolidation, recapitalization and middle-market investments. The company last appeared in the high-yield market in May 2020 to place a $200 million add-on to its existing 8% senior unsecured notes due May 2026.