U.S. Bancorp plans $2.5 billion convertibles at Libor minus 175 bps, up 16%, reoffered at 98.9-99.1

By Kenneth Lim

Boston, Sept. 14 - U.S. Bancorp plans to reoffer on Friday $2.5 billion of 30-year convertible senior debentures at between 98.9 and 99.1 apiece, with a floating coupon set at Libor minus 175 basis points and an initial conversion premium of 16%.

The overnight deal has an over-allotment option for a further $375 million.

U.S. Bancorp stock closed at $33 on Thursday, gaining 0.58% or 19 cents before the deal was announced.

Citigroup is the bookrunner for the Rule 144A offering.

The convertibles will be non-callable for the first year, with puts in years one, two, five, 10, 15, 20 and 25.

They will have full dividend protection. Takeover protection is in the form of a change of control put, but there is no premium make-whole feature.

U.S. Bancorp, a Minneapolis-based bank, said part of the proceeds of the deal will be used to fund a concurrent repurchase of up to 10.2 million shares. The remainder of the proceeds will be used for general corporate purposes, including possible additional share buybacks.

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