ExpressJet $125 million convertible talked at 4.25-4.75% yield, up 26-30%

By Ronda Fears

Nashville, July 28 - ExpressJet Holdings Inc. launched $125 million of 20-year convertible notes talked to yield 4.25% to 4.75% with a 26% to 30% initial conversion premium, for pricing after the close Tuesday.

Citigroup, Merrill Lynch & Co. and Morgan Stanley are joint bookrunners of the Rule 144A deal.

The senior unsecured notes will be non-callable for five years, with puts in years five, 10 and 15. There also is a 120% contingent conversion trigger.

There is an $18.75 million greenshoe available.

Proceeds will be used to repurchase a portion of the shares of ExpressJet common stock currently owned by Continental Airlines Inc.

Houston-based ExpressJet is a regional airline that provides service to Continental Airlines at Houston, Cleveland and Newark.

Also on Monday, Continental Airlines launched the sale of 5 million shares of ExpressJet common stock, which represents some 8% of the outstanding shares of ExpressJet, with a 15% greenshoe. Citigroup, Merrill Lynch and Morgan Stanley are joint bookrunners of that offering as well.

ExpressJet shares closed Monday up 34c, or 2.24%, to $15.54.

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