Nashville, Dec. 17 - Gateway Inc. sold an upsized $275 million of convertible senior notes at par in two parts via joint bookrunners Goldman Sachs and Morgan Stanley.
The tranche A five-year non-callable notes yield 1.5% with a 47.5% initial conversion premium. The tranche B seven-year notes yield 2.0% with a 47.5% initial conversion premium.
Tranche A priced at the middle of yield guidance, while tranche B priced cheaply outside of yield guidance. Both had been talked at a 1.25% to 1.75% coupon. However, both tranches were sold at the aggressive end of premium guidance for 42.5% to 47.5%.
The Rule 144A deal was increased from $250 million.
The personal computer maker intends to use the net proceeds from the offering, and if necessary, other cash and credit facility borrowings, to repurchase all of its series C redeemable convertible preferred stock and the majority of its series A convertible preferred stock for $282.6 million. Any excess proceeds will be used for general corporate purposes.
Terms of the deal are:
Tranche A
| Issuer: | Gateway Inc.
|
| Issue: | Convertible senior notes
|
| Bookrunners: | Goldman Sachs and Morgan Stanley
|
| Amount: | $137.5 million
|
| Greenshoe: | $12.5 million
|
| Maturity: | Dec. 21, 2009
|
| Coupon: | 1.5%
|
| Price: | Par
|
| Yield: | 1.5%
|
| Conversion premium: | 47.5%
|
| Conversion price: | $8.63
|
| Conversion ratio: | 115.8749
|
| Contingent conversion: | No
|
| Contingent payment: | No
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Call: | Non-callable
|
| Price talk: | 1.25-1.75%, up 42.5-47.5%
|
| Pricing date: | Dec. 16, after market close
|
| Settlement date: | Dec. 21
|
| Distribution: | Rule 144A
|
|
|
| Tranche B
|
| Issuer: | Gateway Inc.
|
| Issue: | Convertible senior notes
|
| Bookrunners: | Goldman Sachs and Morgan Stanley
|
| Amount: | $137.5 million
|
| Greenshoe: | $12.5 million
|
| Maturity: | Dec. 21, 2011
|
| Coupon: | 2.0%
|
| Price: | Par
|
| Yield: | 2.0%
|
| Conversion premium: | 47.5%
|
| Conversion price: | $8.63
|
| Conversion ratio: | 115.8749
|
| Contingent conversion: | No
|
| Contingent payment: | No
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Call: | Non-callable
|
| Price talk: | 1.25-1.75%, up 42.5-47.5%
|
| Pricing date: | Dec. 16, after market close
|
| Settlement date: | Dec. 21
|
| Distribution: | Rule 144A
|
|
|
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