Boston, April 29 - QBE Insurance Group Ltd., through a trust, priced an upsized $850 million of 20-year zero-coupon convertible senior unsecured notes on Thursday to yield 2.5% with a 30% initial conversion premium.
The deal came at the cheap end of talk for a yield of 2% to 2.5% and an initial conversion premium 30%. It was increased from a planned $700 million with a greenshoe of $150 million.
The notes will be issued through QBE Funding Trust V but are guaranteed by QBE Insurance.
Bank of America Merrill Lynch is the bookrunner and will work with RBS as the joint lead managers on the Regulation S offering.
If the convertibles trade 30% above their accreted value at set times each six months, investors will receive additional shares on conversion equal to the dividends paid during the six-month period.
The notes are non-callable for the first three years, and then may be called at the greater of accreted value and the market value of 33.4 million shares, the number of shares underlying the convertibles. Investors can request payment in stock.
They may be put in years three, five, seven, 10 and 15. QBE can pay puts in cash, stock or a combination.
There is dividend protection over 7% and takeover protection.
Proceeds will be used to redeem £310 million of existing LYONs convertibles issued in 2007 on May 17 and for general corporate purposes.
QBE is a Sydney, Australia-based insurance company.
| Issuer: | QBE Funding Trust V (QBE Insurance Group Ltd.)
|
| Issue: | Senior convertible securities
|
| Amount: | $850 million
|
| Maturity: | 20 years
|
| Coupon: | 0%
|
| Yield: | 2/5%
|
| Conversion premium: | 30%
|
| Conversion price: | A$27.56
|
| Conversion ratio: | 33.4 million shares
|
| Call: | After three years at greater of accreted value and market value of 33.4 million shares
|
| Put: | In years 3, 5, 7, 10 and 15 at accreted value, payable in cash, stock or both
|
| Pricing date: | April 29
|
| Stock symbol: | ASX: QBE
|
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