PMA Capital $75 million convertible talked at 4.25%-4.75% yield, 27-32% premium

By Ronda Fears

Nashville, Tenn., Oct. 15 - PMA Capital Corp. launched $75 million of 20-year convertible senior debentures talked to price to yield 4.25% to 4.75% with a 27% to 32% initial conversion premium.

The deal is slated to price after the close Wednesday via joint book-running lead managers Banc of America Securities and Credit Suisse First Boston.

Deutsche Bank Securities Inc. convertible analysts put the deal 7.4% cheap at the midpoint of guidance, using a credit spread of 450 basis points over Libor and 40% volatility in the stock, plus accounting for a 3.27% common dividend yield.

The issue is non-callable for four years with puts in years four, eight, 10 and 12.

There is a contingent conversion trigger of 120% and a contingent payment trigger of 120%.

There is an $11.25 million greenshoe available.

The Philadelphia insurance firm said it plans to use proceeds to increase the capital and surplus of its insurance subsidiaries to support expected growth in its reinsurance and insurance operations and for general corporate purposes.

PMA also released guidance on Tuesday.

The company expects to report third quarter after-tax operating earnings, which represents net income before after-tax realized investment gains and losses, in the range of 36c and 38c per diluted share. In addition, the company expects to report 2002 after-tax operating income of between $1.40 and $1.45 per diluted share, excluding operating losses from its run-off operations.

PMA is scheduled to release third quarter results on Oct. 30 after the market close.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.