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New Issue: Sierra Pacific $300 million convertible PIES at 9.0% yield, up 20%
By Ronda Fears
Nashville, Tenn., Nov. 13 - Sierra Pacific Resources sold $300 million of four-year convertible premium income equity securities, or PIES, at par of 50 to yield 9.0% with a 20% initial conversion premium. Lehman Brothers was lead manager of the deal. The issue priced at the middle of price talk that put the yield between 8.75% and 9.25% and the premium at 18% to 22%.
Las Vegas-based Sierra Pacific, a utility holding company, plans to use proceeds for general corporate purposes, which may include financing the activities and capital expenditures of its utility subsidiaries, financing of assets and refinancing existing borrowings.
Each PIES consists of a four-year forward stock purchase contract that carries a 9% dividend rate, and a six-year senior unsecured note that carries a 7.93% coupon which will be reset when the forward stock purchase contract matures.
Terms of the new deal are:
Issuer: Sierra Pacific Resources
Amount: $300 million
Greenshoe: $45 million
Lead Manager: Lehman Brothers
Co-Managers: Merrill Lynch, Goldman Sachs and Wachovia Securities
Maturity Date: Nov. 15, 2005
Dividend: 9.0%
Issue Price: par, $50
Yield-to-maturity: 9.0%
Conversion Premium: 20%
Conversion Price: $13.85/$16.62
Conversion Ratio: 3.0084/3.6101
Call: non-callable
Settlement Date: Nov. 15
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