Rexnord greenshoe lifts convertible preferreds to $402.5 million

By Wendy Van Sickle

Columbus, Ohio, Dec. 7 – The underwriters of Rexnord Corp.’s 5.75% series A mandatory convertible preferred stock fully exercised their $52.5 million greenshoe, increasing the size of the issue to $402.5 million, according to an 8-K filing with the Securities and Exchange Commission.

As previously reported, the company sold $350 million of the mandatory convertible preferreds with an initial conversion premium of 20% on Friday.

The convertible preferreds will be issued as depositary shares representing a 1/20th interest.

Credit Suisse Securities (USA) LLC, Barclays, Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. were the joint bookrunners.

The convertibles have a liquidation preference of $1,000 per share, or $50.00 per each depositary share.

The issue will automatically convert to common stock on Nov. 15, 2019 with an initial reference price of $20.99 and a threshold appreciation price of $25.19. The conversion rate will equate to 1.9851 shares to 2.3821 shares per each depositary share.

Prior to maturity, holders of at least 20 depositary shares can cause the company to convert their holdings upon a fundamental change.

Upon a fundamental change, the conversion rate may be adjusted. Holders may also be entitled to a make-whole premium.

The preferreds are not redeemable.

Proceeds will be used to repay $195 million of an outstanding term loan. Remaining funds will be used for general corporate purposes.

Rexnord is a West Milwaukee, Wis.-based industrial company comprising two strategic platforms: Process and motion control, and water management.

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