Valvoline launched a $500m bond and priced $600m of it the same day, and the proceeds repay its secured term loan A in full

Valvoline's senior secured term loan A is being repaid in full.

That is what the company says it will do with the money from $600,000,000 of 6.125 percent senior notes due 2034, priced on Thursday and reported in a Form 8-K accepted at 17:53 Eastern. The rest partially repays the senior secured term loan B, pays fees and expenses, and anything left goes to general corporate purposes. Closing is expected on 24 August.

Launched and priced in one day

The filing carries two press releases and both are dated 13 August. The first announces the commencement of an offering of $500 million. The second announces the pricing of $600,000,000, upsized by $100 million against the size announced earlier the same day.

Neither release says why the size moved.

The two documents describe the deal in nearly the same words, as part of a coordinated refinancing transaction intended to strengthen the maturity profile and improve liquidity. One word separates them. Both press releases call the refinancing leverage neutral, and the 8-K itself, where the company speaks in its own voice rather than through a release, does not use the phrase anywhere.

Secured out, unsecured in

The notes are unsubordinated unsecured obligations. Every subsidiary that guarantees the existing senior secured credit facilities, or the 2031 notes, guarantees these on the same unsecured basis.

So a secured term loan is being taken out and replaced by unsecured paper at 6.125 percent, with the guarantee structure following the borrower rather than the collateral. The notes are not registered. They go to qualified institutional buyers under Rule 144A and to non-United States persons under Regulation S.

The part that is not signed

Valvoline also intends to amend its revolving credit facility, raising availability from $475 million to $600 million, cutting the pricing and extending the maturity to five years after the amendment takes effect.

That amendment does not exist. The company states that as of the date of the filing it has not entered into definitive documentation for it, and that it cannot be certain it will do so on the terms described or at all. It also states that the notes are not conditioned on the amendment becoming effective, which is the sentence that matters if the second half of the plan slips.