Marriott’s 1.5% convertibles increased to $230 million via greenshoe

By Angela McDaniels

Tacoma, Wash., Sept. 25 – The underwriters of Marriott Vacations Worldwide Corp.’s 1.5% convertible senior notes due 2022 exercised their $30 million over-allotment option in full, increasing the size of the issue to $230 million.

As previously reported, the company priced $200 million of the convertibles on Wednesday at par with an initial conversion premium of 30%.

Pricing came in the middle of the 1.25% to 1.75% yield talk and the conversion premium talk of 27.5% to 32.5%.

J.P. Morgan Securities LLC, BofA Merrill Lynch and SunTrust Robinson Humphrey Inc. are the joint bookrunners for the Rule 144A deal.

Conversions will be settled in cash, common stock or both, at the company’s option.

The notes are contingently convertible prior to June 15, 2022. After that date, they can be converted at any time.

In connection with the deal, the Orlando-based pure-play vacation ownership company entered into privately negotiated convertible note hedge transactions with one or more initial purchasers of the notes. The company also entered into warrant transactions with the hedge counterparties.

The strike price of the warrants is a 55% premium over Wednesday’s closing share price.

About $40 million of the deal’s proceeds will be used to repurchase common stock from purchasers of the new notes via privately negotiated transactions. Proceeds will also be used to fund the hedging transactions and for general corporate purposes, which may include debt repayment, acquisitions, working capital, inventory, share repurchases and capital expenditures.

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