Parsons greenshoe lifts 0.25% convertibles due 2025 to $400 million

By Marisa Wong

Los Angeles, Aug. 20 – The underwriters of Parsons Corp.’s offering of 0.25% five-year convertible notes exercised their $50 million over-allotment option, increasing the total size of the issuance to $400 million.

Parsons priced an upsized $350 million of five-year convertible notes after the market close on Monday at par with a coupon of 0.25% and an initial conversion premium of 35%, as previously reported.

Pricing came at the midpoint of talk for a coupon of 0% to 0.5% and at the rich end of talk for an initial conversion premium of 30% to 35%, according to a market source.

BofA Securities Inc. and Morgan Stanley & Co. LLC were joint bookrunners for the Rule 144A offering, which had an initial size of $300 million with a greenshoe of $45 million.

The notes are contingently convertible until March 15, 2025.

They are non-callable until Aug. 21, 2023 and then subject to a 130% hurdle.

The notes will be settled in cash, shares or a combination of both at the company’s option.

In connection with the pricing of the notes, the company entered into convertible note hedge and warrant transactions.

The warrant transactions carry a strike price of $66.46.

Approximately $36 million of the proceeds will be used to cover the cost of the hedge transactions with the remaining amount to be used for general corporate purposes, which may include potential acquisitions.

Parsons is a Centreville, Va.-based technology company serving the defense, intelligence and critical infrastructure markets.

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