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Garda World bonds jump on $5B recapitalization offer

Garda World bonds jump on $5B recapitalization offer
Business
GardaWorld Security’s largest bond traded at the highest price in almost a year after BC Partners and the company’s chief executive officer agreed on a $5.2 billion recapitalization of the security and cash services company.

Garda’s $625 million (U.S.) of 8.75 per cent bonds due 2025 traded as high as 100.75 cents on the dollar Tuesday compared with 97.875 cents on Monday, according to Trace price data. The notes haven’t closed above par since August 2018.

Private equity firm BC Partners led investors including Chairman and CEO Stephan Cretier who agreed to buy Rhone Group’s interest in Montreal-based Garda World, according to a statement Tuesday. Following the closing of the deal, BC Partners will have a 51 per cent equity interest in GardaWorld. The deal is the largest private buyout in Canadian history, according to BC Partners Chairman Raymond Svider.

“We look forward to partnering with GardaWorld’s founder Stephan Crétier and management team to further grow the company in the attractive security services industry, which we believe offers significant opportunities for consolidation,” said Paolo Notarnicola, who led the deal for BC Partners.

Barclays & TD Securities acted as financial advisers to GardaWorld, while Scotiabank advised BC Partners. JPMorgan Chase Bank, Bank of America, Barclays & TD Securities are providing financing for the deal, the statement said.

The extra-yield investors demand to hold Garda’s bonds instead of the U.S. Treasury bond used as a benchmark for the deal pricing tightened to 664 basis points compared with 736 basis points on Monday, according to Trace prices. The notes, which are rated CCC+ by S&P Global Ratings, were first priced in April 2017 at a spread of 667 basis points, Bloomberg data show.
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