The Five-Year Plan

We are approaching another “bubble” moment. This time it is in the high-yield market. On Tuesday, the WSJ reported that the yield on “Junk” is approaching an all-time low, falling below 7% for the first time in six years. “The quest for yield is extending a terrific run for junk bonds. They are already up 2.57% so far this year, following returns of 15.2% in 2010 and 57.5% in 2009, according to the Merrill Index.” And it is not only in the rate, covenant-light terms have returned evidencing the bargaining strength of the issuer.

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ACLI Receives Platinum Touch

On Monday, American Commercial Lines Inc. announced it had entered into a definitive agreement to be acquired by an affiliate of Platinum Equity, a private equity firm “specializing in the merger, acquisition and operation of companies that provide services and solutions to customers in a broad range of business markets.” The transaction has an enterprise value of $777 million), which implies a 7.4X TEV/EBITDA multiple using a LTM EBITDA of $104.9 million as of June 30^th according to John Parker of Jefferies. Continue Reading

Fixing Debt

Also, last week, Commercial Barge Line Company (“CBL”), a direct wholly owned subsidiary of American Commercial Lines Inc. (“ACL”) announced the private placement and pricing of its $200 million 12 1/2% senior secured second lien notes due July 15, 2017. The notes were issued at a price of 95.181% yielding 13.13%. Concurrent with this offering, CBL and ACL will close on a new four-year $350 million senior secured first lien asset-based revolving credit facility.

The proceeds of the notes and the credit facility will be used to repay ACL’s existing credit facility, to pay certain related transaction costs and expenses and for general corporate purposes.

The book-running managers for the notes were Bank of America, UBS, SunTrust and Wachovia.