$300m (+45m) perpetual pfd coming tonight from GS/CS/WFC. Terms: 2-2.5% up 10%, s/c 5yr@150% (86.806), full pctns. UOP = gcp/acq. 100 yr old $1.7B cereal producer. Not exactly a CEREAL issuer but existing $242 came 02/13, 3.75% up 25% w/4.2 call pctn now. 22 vol backs out L+850 (125.5 vs 52.61) w/3.7y b/e (75 bp thru middle) Sleepy & now primarily in o/r hands. Sen 7.275 ’22 and 6.75% ’21 back out OAS L+411/L+433
PF cash = 402m
Debt = 1.9b
LTM FCF = 87m
EBITDA = 260m (incl acq scheduled 2 close)
Lev = 7.3x
We’ll assume L+700 for 5 yr pref (we think existing prf is cheap).
ADV = 235k
No leaps
We’d use 22 vol & gc borrow.
Theo 101.8
Model is a sanity check
This is a c/flow and b/even trade.
Equity x/over & l only will like sector and structure so exp 3.75% type performance