By Ronda Fears
Nashville, Jan. 12 - GenCorp Inc. sold $100 million of 20-year convertible notes at par to yield 4% with a 45% initial conversion premium in the Rule 144A market via sole bookrunner Deutsche Bank Securities.
Final terms were more aggressive than even revised price talk that put the issue pricing to yield 4.25% to 4.75%, up 40% to 45%.
Timing for the deal also was advanced a full day.
All those details were significantly different than when the issue launched before the market opened.
The deal was launched Monday morning to price after Tuesday's close with guidance for a yield of 4.75% to 5.25% and a 33% to 37% initial conversion premium.
Terms were tightened and the timing advanced to mid-afternoon on very strong demand, as the issue traded around 2:15 p.m. ET at 5.25 points over issue price. The bid had climbed to 5.5 points over with an offer of 6.25 points over, but the issue pulled back sharply after the terms were squeezed.
At about the close, the new issue was quoted at 3.5 points over on the bid side, 4.75 points over on the offer.
GenCorp's existing 5.75% convertible due 2007 lost 2.375 points on the day, traders said, mostly due to the hit the stock took from the new deal. GenCorp shares lost 57 cents, or 5.08%, to $10.64.
Holders of the new issue will have full dividend protection by way of a conversion ratio adjustment.
The Sacramento, Calif.-based company intends to use proceeds to repay about $35 million of outstanding debt under its revolving credit facility, prepay about $19 million of payments that would otherwise be required in 2004 under its term loan A and for general corporate purposes.
Concerns among the rating agencies revolve around performance at GenCorp's automotive unit and higher pension expense. But the credit analysts are comfortable with solid performance at GenCorp's aerospace and defense position in the favorable defense spending environment.
Terms of the deal are:
| Issuer: | GenCorp Inc.
|
| Issue: | Convertible subordinated unsecured notes
|
| Bookrunner: | Deutsche Bank Securities
|
| Joint lead managers: | Wachovia Securities and Scotia Capital
|
| Co-managers: | BNY Capital Markets, NatCity Investments and Wells Fargo Securities
|
| Amount: | $100 million
|
| Greenshoe: | $25 million
|
| Maturity: | Jan. 16, 2024
|
| Coupon: | 4.0%
|
| Price: | Par
|
| Yield to maturity: | 4.0%
|
| Conversion premium: | 45%
|
| Conversion price: | $15.43
|
| Conversion ratio: | 64.8088
|
| Contingent conversion: | 120%
|
| Contingent payment: | 120%
|
| Call: | Non-callable for 4 years, then for 2 years with 125% trigger
|
| Put: | In years 6, 10 and 15
|
| Ratings: | Fitch: B
|
| Moody's: B3
|
| S&P: B+
|
| Price talk: | Initial: 4.75-5.25%, up 33-37%
|
| Revised: 4.25-4.75, up 40-45%
|
| Pricing date: | Jan. 12, after the close
|
| Settlement date: | Jan. 16
|
| Distribution: | Rule 144A
|
|
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
