Alon greenshoe exercise ups five-year 3% convertibles to $150 million

By Toni Weeks

San Luis Obispo, Calif., Sept. 16 - Underwriters for Alon USA Energy Inc.'s 3% convertible senior notes due 2018 exercised their over-allotment option in full, lifting total proceeds to $150 million.

The company priced $130 million of the convertibles with the $20 million greenshoe last Tuesday at par to yield 3% with an initial conversion premium of 32.5%, as reported by Prospect News.

Goldman Sachs & Co. and Barclays were joint bookrunners for the offering.

The notes will be convertible into cash, common shares, or a combination of cash and shares, at Alon's election, based on an initial conversion rate of 67.627 common shares per $1,000 principal amount of convertibles, equivalent to an initial conversion price of about $14.79 per share. Holders may convert their notes prior to the business day preceding June 15, 2018 under certain circumstances and at any time after that regardless of circumstances.

As reported, in connection with the offering, Alon entered into privately negotiated convertible note hedge and warrant transactions with initial purchasers of the bonds.

The strike price on the warrants was set at about $20.09 per share, which boosts the initial conversion premium from the issuer's perspective to 80%.

Proceeds will be used to fund the cost of the note hedge transactions and to fund the repurchase of a portion of the outstanding senior secured notes due 2014 issued by Alon Refining Krotz Springs Inc., a subsidiary of the company.

Based in Dallas, Alon is a refiner and marketer of petroleum products.

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