Thursday, July 19, 2012

In a sign of a frothy market 5-Hour Energy borrows $450 million

New company? One product? Can't raise equity? That's OK. Just hit the high yield bond market which is red hot. The market will lend you the money. And you will even get more than you originally planned.
Reuters: - Innovation Ventures LLC/Finance Corp (5-Hour Energy) on Thursday sold $450 million of senior secured notes in the 144a private placement market, said IFR. The deal was upsized from an originally planned $400 millon. Bank of America Merrill Lynch and Jefferies were the joint bookrunning managers for the sale.

Obviously the folks on Wall Street have been consuming too much 5-hour energy to lend money to a firm that should really be trying to raise venture capital equity. This is truly an indication of a frothy fixed income market.
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