By Ronda Fears
Nashville, Sept. 11 - EMI Group plc sold an upsized $243 million of seven-year convertible bonds at par to yield 5.25% with a 40% initial conversion premium - at the aggressive end of price talk and increased from a planned $200 million amount.
EMI Group Finance (Jersey) Ltd. issued the bonds, which are guaranteed by EMI and Capitol Records Inc. Joint bookrunners of the deal were BNP Paribas, HSBC and JPMorgan.
"We are very pleased with the market's reception of our convertible bond offering, which was significantly oversubscribed," said EMI chief financial officer Roger Faxon, in a news release.
"This is a great result that recognizes the value being created at EMI. Today's bond issue allows us to reposition existing debt, diversify our sources of capital and lengthen the maturity of our debt.
"Eighteen months ago we adopted a strategy aimed at repositioning and extending the maturity of our debt. Today's offering is a continuation of that process. The proceeds of today's issue will be used to refinance existing debt, part of which was used to fund certain acquisitions," Faxon continued.
"Given the strength of credit markets, we may take other steps in the near future to continue to diversify our sources of funds and lengthen the maturity of our debt as opportunities arise."
The issue sold at the rich end of price talk that put the coupon between 5.25% and 5.75% with a premium of 35% to 40%.
Deutsche Bank Securities analysts put it 0.24% rich at the final terms, using a credit spread of 475 basis points over Libor and a 40% stock volatility.
The issue converts into new EMI ordinary shares.
The deal was offered outside the U.S. under Regulation S.
Terms of the new deal are:
Issuer: EMI Group Finance (Jersey) Ltd.
| Issue: | Guaranteed convertible bonds
|
| Lead managers: | | BNP Paribas, HSBC and JPMorgan
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| Co-managers: | Cazenove & Co. and UBS Investment Bank
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| Amount | $243 million
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| Maturity: | 2010
|
| Coupon: | 5.25%
|
| Price: | Par
|
| Redemption price: | Par
|
| Yield: | 5.25%
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| Conversion premium: | 40%
|
| Conversion price: | 193.38p
|
| Conversion ratio: | 5.1712
|
| Call: | Non-callable for 4 years, then with 130% hurdle
|
| Price talk: | 5.25-5.75%, up 35-40%
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| Pricing date: | Sept. 11
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| Settlement: | Oct. 2
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