In another development related to the upcoming spinoff of Insurance Auto Auctions from KAR Auction Services, IAA Spinco Inc. — which will be renamed IAA — announced a proposed senior notes offering Monday morning.
Specifically, IAA said in Monday's news release it intends on offering (subject to market conditions) an aggregate principal amount of $400 million in senior notes due 2027. It provided an update on that Wednesday. It upped the service of the offering of 5.500% senior notes from $400 million to $500 million.
IAA said the net proceeds from the offering are slated to be used — along with an anticipated $800 million in borrowings from senior secured credit facilities that IAA plans to enter — towards paying a special dividend to KAR as well as spinoff-related fees and expenses.
“The proceeds of the notes offering will be held in escrow until satisfaction of the conditions precedent to the spin-off and certain other escrow release conditions,” IAA said in a news release Wednesday.
“The notes will be issued at an issue price of 100% and, if the escrow release conditions are satisfied, will be guaranteed on a senior unsecured basis on and after the escrow release date by the Company's existing and future domestic subsidiaries that will guarantee its proposed senior secured credit facilities,” it added.
The company anticipates that the offering will close on June 6, contingent on customary closing conditions.
IAA added: “The notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), any state securities laws or the securities laws of any other jurisdiction, and may not be offered or sold in the United States absent registration or an applicable exemption from registration. Accordingly, the notes are being offered and sold only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act.
“This press release does not constitute an offer to sell, or the solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful,” IAA said.
The spin-off was first announced in February 2018.
In April of this year, the planned spin-off reached what KAR chief executive Jim Hallett called “an important milestone”: The Internal Revenue Service provided KAR a favorable private letter ruling regarding the tax-free status of the IAA spin-off, KAR said in a news release on April 1.