Tuesday, March 27, 2012

HD Supply Bonds Not Registered in U.S.

PEU owned HD Supply is floating at least $2.625 billion in "covenant lite" bonds outside U.S. jurisdiction, according to SEC filings. 

The Notes will be offered in a private offering exempt from the registration requirements of the United States Securities Act of 1933, as amended (the “Securities Act”). The Notes will be offered only to qualified institutional buyers pursuant to Rule 144A and to certain persons outside the United States pursuant to Regulation S, each under the Securities Act.

The Notes will not be and have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

I smell a liquidity recap, more accurately called "debt for dividends" or "dividend bleeding."  That's one PEU odor.  (PEU stands for private equity underwriter)

Update 4-1-12:  U.S. regulators warned banks on issuing "covenant lite" junk bonds for PEU's.  Carlyle beat them to the warning punch by offshoring the issuance.