United Auto launches $250 million 20-year convertibles to yield 3%-3.5%, up 25%-30%

By Rebecca Melvin

Princeton, N.J., Jan. 23 - United Auto Group Inc. plans to price $250 million of 20-year convertibles after the close of markets on Wednesday, according to a syndicate source.

Price talk on the convertible senior subordinated notes is for a coupon of 3% to 3.5% and for an initial conversion premium of 25% to 30%.

Merrill Lynch is bookrunner for the Rule 144A deal, and Thomas Weisel is co-manager.

There is a greenshoe of $50 million.

The notes are non-callable for five years and will have puts in years five, 10 and 15. They have contingent conversion at a trigger of 120%, and contingent payment, also at a trigger of 120%.

The offering will also feature full dividend protection via a conversion ratio adjustment and takeover protection via a conversion ratio adjustment.

The notes will have a par value of $1,000.

Proceeds are expected to be used to repay United Auto Group's existing long-term debt under its revolving senior credit facility, which may be re-borrowed, and to purchase, simultaneously with the offering, up to 500,000 shares of common stock.

Based in Bloomfield Hills, Mich., United Auto Group is a U.S. automotive retailer.

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