By Stephanie N. Rotondo
Seattle, Sept. 20 – Meritor Inc. priced a $300 million offering of unsecured convertible senior notes due 2037 at par to yield 3.25% with an initial conversion premium of 60%, the company said in a press release on Wednesday.
The deal was first announced on Monday. Pricing came in line with the initial price talk.
BNP Paribas Securities Corp., BofA Merrill Lynch, J.P. Morgan Securities LLC, RBC Capital Markets LLC and PNC Capital Markets LLC are the joint bookrunners of the Rule 144A deal.
There is a $25 million 13-day over-allotment option.
Holders can convert their bonds through July 15, 2037 only in certain circumstances. After that date, the notes can be converted at any time.
Conversions will be settled in cash up to the principal amount of the notes surrendered for conversion. For the remainder owed, conversions will be settled in cash, common stock, or a combination of both, at the company’s option.
The initial conversion price is $39.92, equal to an initial conversion rate of 25.0474 shares per each $1,000 of notes.
The convertibles become callable on or after Oct. 15, 2025. The issue is also putable on that date.
Proceeds will be used, along with cash on hand, to repurchase $118.6 million of its 4% convertible notes due 2027 and $116.7 million of its 7.875% convertible notes due 2026 from a limited number of privately negotiated transactions. The repurchases will also include a premium payment on the notes.
Meritor is a Troy, Mich.-based supplier of drivetrain, mobility, braking and aftermarket solutions for commercial vehicle and industrial markets.
| Issuer: | Meritor Inc.
|
| Securities: | Convertible senior unsecured notes
|
| Amount: | $300 million
|
| Greenshoe: | $25 million
|
| Maturity: | Oct. 15, 2037
|
| Bookrunners: | BNP Paribas Securities Corp., BofA Merrill Lynch, J.P. Morgan Securities LLC, RBC Capital Markets LLC and PNC Capital Markets LLC
|
| Coupon: | 3.25%
|
| Price: | Par of $1,000
|
| Yield: | 3.25%
|
| Initial conversion premium: | 60%
|
| Initial conversion price: | $39.92
|
| Initial conversion rate: | 25.0474 shares
|
| Call options: | On or after Oct. 15, 2025 at par plus accrued interest
|
| Put options: | On Oct. 15, 2025 at par plus accrued interest
|
| Contingent conversion: | Prior to July 15, 2037
|
| Pricing date: | Sept. 19
|
| Settlement date: | Sept. 22
|
| Distribution: | Rule 144A
|
| Talk: | 3.25% yield, up 60%
|
| Stock symbol: | NYSE: MTOR
|
| Stock reference price: | $24.9527
|
| Market capitalization: | $2.219 billion
|
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