By Ronda Fears
Nashville, April 8 - In a deal marketed intraday, Walt Disney Co. sold an upsized $1.15 billion of 20-year convertibles at par to yield 2.125% with a 72% initial conversion premium - in the midrange of guidance.
While the books ran heavy - mostly hedge funds climbing all over each other to get to play - traders said the deal was "straddling par, give or take a quarter to half point" in the gray market.
While there was a lot of hedge fund participation, a source working on the deal said demand was spread across the convertible market and even included a few retail accounts.
Interest also spread across the waters from the U.S. into Europe, he said, but did not readily have a quantifier for the level of interest in the Disney deal by foreign buyers.
"People like the name and like the credit," the capital markets source said.
"It was more fairly priced that some of the other deals we've seen lately, too. You can see that from where it was in the gray market and how the stock held up during the day while the deal was being marketed."
Disney shares ended off 61c, or 3.44%, to $17.13.
Price talk had put the yield at 1.875% to 2.375% and initial conversion premium at 69% to 74%, and, at the midpoint of guidance, sellside analysts put it roughly at fair value to 7% rich.
The deal was registered.
Disney, the entertainment giant, said only that proceeds would be used for general corporate purposes.
Issuer: The Walt Disney Co.
| Issue: | Convertible senior notes
|
| Joint lead managers: | JPMorgan (books), Salomon Smith Barney (books) and Credit Suisse First Boston
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| Amount | $1.15 billion (up from $1billion)
|
| Greenshoe: | $172.5 million (up from $150 million)
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| Maturity: | April 15, 2023
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| Coupon: | 2.125%
|
| Price: | Par
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| Yield: | 2.125%
|
| Conversion premium: | 72%
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| Conversion price: | $29.4636
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| Conversion ratio: | 33.94
|
| Call: | Non-callable for 5 years
|
| Put: | In years 5, 10 and 15
|
| Contingent Conversion: | 120% for five years, then 100%
|
| Expected ratings: | Moody's: Baa1
|
| S&P: BBB+
|
| Settlement: | April 14
|
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