By Kenneth Lim
Boston, March 1 - ArvinMeritor Inc. on Wednesday priced an upsized $260 million of 20-year convertible senior notes on the rich end of talk to yield 4.625% with an initial conversion premium of 35%, syndicate sources confirmed.
UBS Investment Bank, which is running the books, has a greenshoe option of $40 million.
The size of the deal was originally set at $200 million, with a greenshoe of $30 million.
The deal came at the rich end of talk, which had guided for a coupon of 4.625% to 5.125% and an initial conversion premium of 30% to 35%.
The notes are distributed under Rule 144A.
The senior unsecured notes will mature on March 1, 2026, and will be priced at par of $1,000 apiece. At the initial conversion premium, each note can be exchanged for ArvinMeritor stock at $20.98 per share, or a conversion ratio of 47.6667.
The notes will be non-callable for 10 years, and will have puts in years 10, 12, 14, 16 and 18. There is a contingent conversion feature with a 120% threshold, and the securities will have net share settlement. After March 1, 2016, the cash coupon will step down to zero.
ArvinMeritor said late Tuesday that it will use proceeds from the deal to funds its planned buyback of up to $450 million of its outstanding straight bonds. The Troy, Mich.-based car and truck parts has made a tender offer for its 6.625% notes due 2007, its 6.75% bonds due 2008, the 6.8% bonds due 2009 and the 7.125% notes due 2009.
The rest of the repurchase program will be funded with cash on hand and proceeds from the sale of its Purolator Filters business in North America.
| Issuer: | ArvinMeritor Inc.
|
| Issue: | Convertible senior unsecured notes
|
| Bookrunner: | UBS Investment Bank
|
| Amount: | $260 million
|
| Greenshoe: | $40 million
|
| Maturity: | March 1, 2026
|
| Coupon: | 4.625%
|
| Price: | Par
|
| Yield: | 4.625%
|
| Conversion premium: | 35%
|
| Conversion price: | $20.98
|
| Conversion ratio: | 47.6667
|
| Contingent conversion: | 120%
|
| Net share settlement: | Yes
|
| Dividend protection: | If dividends exceed 10 cents per share per quarter
|
| Takeover protection: | Yes
|
| Hard-call protection: | 10 years
|
| Puts: | Years 10, 12, 14, 16, 18
|
| Price talk: | 4.625%-5.125%, up 30%-35%
|
| Pricing date: | March 1, after close
|
| Distribution: | Rule 144A
|
| Symbol: | NYSE: ARM
|
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