Recent IPO Amer Sports taps high-yield bond market with $600 million deal

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Amer Sports Inc., the Finnish sportswear company that went public last week, on Tuesday launched an offering of $600 million worth of seven-year high-yield bonds.

The Helsinki-based company
and some of its units have also entered a new credit agreement, under which they will have a new $600 million term-loan facility, a new €600 million term-loan facility and a new revolving-credit facility that will initially be $710 million.

Proceeds from the bond deal, along with proceeds from the new credit agreements, are earmarked to repay existing credit facilities as the company moves to lower interest costs.

The news surprised investors, coming just days after Amer Sports made its debut on the New York Stock Exchange with a deal that priced below the proposed price range at $13 a share, but ended its first day of trading up 3%.

With 105 million shares in the IPO, Amer Sports raised about $1.37 billion with 21 underwriters, including Goldman Sachs, BofA Securities, JPMorgan and Morgan Stanley.

Amer Sports owns outdoor brands Arc’teryx, Salomon and Wilson and operated 261 stores globally as of Sept. 30.

The company reported 2022 revenue of $3.55 billion, up from $2.4 billion in 2020, with a compound annual growth rate of 20.4%. Its net loss grew to $252.7 million from $237.2 million during the same time frame.

Principal shareholders of Amer Sports include FountainVest Partners, Anta Sports Product Ltd., Tencent Holdings Ltd. and Anamered investments Inc., which is an entity affiliated with billionaire Dennis J. “Chip” Wilson, the founder of Lululemon Athletica Inc.

Proceeds of the deal were mostly used to pay down debt. S&P Global Ratings assigned the credit a BB rating, which is two notches into speculative-grade, or high-yield, status. That was an upgrade from the B-plus rating it had assigned to the credit before the IPO.

S&P is expecting the company’s adjusted debt-to-Ebitda, or earnings before interest, tax, depreciation and amortization, to fall to about 3.5 times to 3.8 times by year-end, from an expected 5.6 times to 5.7 times at the end of 2023.

The rating ‘is supported by our view that the company maintains a moderately strategic status for its majority shareholder ANTA Sports (44.5% equity stake post-IPO). We therefore expect the controlling shareholder will continue supporting Amer Sports’ expansion in Asia-Pacific and provide extraordinary support in some foreseeable circumstances,” the rating agency said.

Investors seemed to like the deal on Tuesday, with the stock last up 5.8% at $15.45, or 19% above its IPO price.

The Renaissance IPO exchange-traded fund
 has gained 16.6% in the last 12 months, while the S&P 500
has gained 20%.

For a preview of 2024 IPOs: Reddit, Shein and Stripe may lead a revived IPO market in 2024

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Steve Gelsi contributed.

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