By Abigail W. Adams
Portland, Me., Jan. 28 – Marriott Vacations Worldwide Corp. priced $500 million of five-year convertible notes after the market close on Wednesday at par with a coupon of 0% and an initial conversion premium of 40%, according to a company news release.
Pricing came at the rich end of initial talk for a coupon of 0% to 0.5% and richer than initial talk for an initial conversion premium of 32.5% to 37.5%, according to a market source.
J.P. Morgan Securities LLC and BofA Securities Inc. were active bookrunners for the Rule 144A offering, which carries a greenshoe of $75 million.
The notes are non-callable.
They will be settled in cash, shares or a combination of both at the company’s option.
The notes will be unsecured but guaranteed by Marriott Ownership Resorts Inc.
In connection with the pricing of the notes, the company entered into convertible note hedge and warrant transactions.
The strike price on the warrant transaction is $213.7625, which represents a 75% premium over the last reported sales price of stock.
Proceeds will be used to cover the cost of the hedge transactions, to finance the acquisition of Welk Resorts, to repay certain Welk Resorts debt, to repay a portion of the company’s term loan and for general corporate purposes.
Marriott previously announced its intention to acquire Welk Resorts for $430 million in cash and 1.4 million shares of common stock.
Marriott Vacations is an Orlando, Fla.-based global vacation company.
| Issuer: | Marriott Vacations Worldwide Corp.
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| Guarantor: | Marriott Ownership Resorts Inc.
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| Securities: | Convertible senior notes
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| Amount: | $500 million
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| Greenshoe: | $75 million
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| Maturity: | Jan. 15, 2026
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| Bookrunners: | J.P. Morgan Securities LLC and BofA Securities Inc.
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| Coupon: | 0%
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| Price: | Par
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| Yield: | 0%
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| Conversion premium: | 40%
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| Conversion price: | $171.07
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| Conversion rate: | 5.8476
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| Call options: | None
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| Pricing date: | Jan. 27
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| Settlement date: | Feb. 2
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| Distribution: | Rule 144A
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| Talk: | Initial talk for coupon of 0% to 0.5% and richer than initial talk for initial conversion premium of 32.5% to 37.5%
|
| Stock symbol: | NYSE: VAC
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| Stock price: | $122.15 at market close Jan. 27
|
| Market capitalization: | $5.02 billion
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