Published on 4/12/2005 in the Prospect News Convertibles Daily.
New Issue: El Paso sells $750 million convertible at 4.99% dividend, up 25%, reoffered at 97.5
By Ronda Fears
Nashville, April 12 - El Paso Corp. sold $750 million of convertible perpetual preferreds with a 4.99% dividend and 25% initial conversion premium. Joint bookrunners Deutsche Bank Securities and Banc of America Securities reoffered the issue at 97.5% of par, however.
The dividend was sweetened from original price talk for 4.375% to 4.875%, and the premium was set at the cheap end of guidance of 25% to 30%.
The Rule 144A deal was rescheduled to price from Thursday last week when El Paso announced that day that it would be making another restatement to previous earnings reports made with the Securities and Exchange Commission.
The issue will be non-callable for five years, then with a 130% hurdle through maturity.
The Houston-based power company plans to use proceeds, plus cash on hand if needed, to redeem the $300 million of 8.25% cumulative preferred stock of subsidiary El Paso Tennessee Pipeline Co. and to prepay the estimated $442 million Western Energy settlement obligations.
Terms of the new convertible are:
| Issuer: | El Paso Corp.
|
| Issue: | Convertible perpetual preferreds
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| Bookrunners: | Deutsche Bank Securities and Banc of America Securities
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| Co-managers: | Citigroup Global Markets Inc., Credit Suisse First Boston, Morgan Stanley, Merrill Lynch, Goldman Sachs, ABN Amro, BNP Paribas, Scotia Capital, SG Cowen, Hypo and Fortis
|
| Amount: | $750 million
|
| Greenshoe: | $150 million
|
| Maturity: | Perpetual
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| Dividend: | 4.99%
|
| Price: | Par, $1,000
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| Reoffer price: | 97.5% of par
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| Conversion premium: | 25%
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| Conversion price: | $13.03
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| Conversion ratio: | 76.7754
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| Call: | Non-callable for 5 years, then with 130% trigger
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| Dividend protection: | Yes
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| Takeover protection: | No
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| Price talk: | Original: 4.375%-4.875%, up 25%-30%
|
| Revised: 5%, up 25%-30%
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| Pricing date: | April 11, after the close
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| Settlement date: | April 15
|
| Distribution: | Rule 144A
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