Stone Energy greenshoe exercised, lifting convertibles to $300 million

By Marisa Wong

Madison, Wis., March 6 - Stone Energy Corp. issued $300 million of five-year convertible notes on Tuesday. The total amount of convertible notes includes an over-allotment option for $25 million of notes that was fully exercised on March 1, according to an 8-K filing with the Securities and Exchange Commission.

The company priced $275 million of the convertibles at par on Feb. 29 to yield 1.75% with an initial conversion premium of 33.5%. The size of the Rule 144A offering was initially going to be $250 million.

The company estimates net proceeds to be $291.1 million.

Barclays Capital Inc. and Bank of America Merrill Lynch were the joint bookrunners.

As previously reported, the notes are non-callable with no puts, and they have dividend and change-of-control protection.

The securities also have contingent conversion at a price hurdle of 130%.

In connection with the offering, the company entered into convertible note hedge and warrant transactions. The warrants have an initial strike price of $55.9125.

Proceeds will be used to fund the cost of the convertible note hedge transactions and for general corporate purposes, which may include providing longer-term financing for the recently closed Pompano, Wideberth and Appalachian acquisitions and repayment of outstanding borrowings under the company's bank credit facility.

Stone Energy is an independent oil and natural gas exploration and development company based in Lafayette, La.

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