Gleacher Natwest recently wrapped up a $420 million junk bond offering for Anaconda Nickel Ltd., a Perth, Australia-based mineral exploration company.
The two-tranche issue included a $340 million, 9.375% fixed-rate senior secured note with a 10-year bullet repayment maturity and an $80 million senior secured floating-rate portion to be drawn over the next 18 months. Standard & Poor's Corp. gave the issue a BB-minus rating.
In July, Gleacher Natwest fully underwrote an $80 million bridge loan to the company to fund the project until the high-yield deal was complete. The company then placed a $70 million common equity issue with global institutional investors.
Salomon Brothers and CIBC Wood Gundy Securities Corp. also had leading parts of the high-yield issue, which was closed in late August.
Investors clamored for allocations; 68% of the 108 investors that the deal was marketed to bought in.
This is the biggest junk deal that Gleacher Natwest has led. London- based National Westminster Bank PLC acquired Gleacher & Co., a merger-and- acquisition boutique, in late 1995. Gleacher Natwest ranks 23d among junk underwriters this year, having led only four deals, according to Securities Data Co.
"This is a watershed deal for us," said David Knowlton, managing director at Gleacher Natwest. "We're very boutique in nature and not trying to be all things to all people. We want to be focused on a select group and provide expertise and senior coverage on all transactions."
Observers said the issue's performance in the aftermarket reflected Gleacher Natwest's aptitude.
"Anyone can go out and sell a bunch of bonds, but the acid test is what kind of support you get in the aftermarket," said one high-yield investor. "It's been quite good."
Anaconda's issue is the first project finance that has been brought to the high-yield market. Deals are typically more expensive to fund through the project finance market, which requires more equity protection for cost overruns and maintenance tests.
The high-yield market, in contrast, requires less equity up front and less balance-sheet support. The only bond covenants in the high-yield market are related to additional debt incurrence and require issuers to make the scheduled dividend payments to investors.
"We took a good hard look at this and saw that it could be financed in the high-yield market," Mr. Knowlton said.
