By Ronda Fears
Nashville, Tenn., Oct. 22 - General Mills Inc. sold $1.35 billion in proceeds of 20-year convertible senior unsecured debentures at 67.165 for a yield to maturity of 2.0% and with a 25% initial conversion premium, at the cheap end of guidance.
Joint bookrunning lead managers for the Rule 144A offering were Banc of America Securities and Morgan Stanley.
Minneapolis-based General Mills plans to use proceeds to partially repay the $4 billion of commercial paper taken on to help fund the $10.4 billion purchase of Pillsbury from Diageo plc last year.
Simultaneously with the new deal, although in a separate transaction, General Mills bought a three-year call option from Diageo plc on 26.2 million shares that Diageo owns as a result of the acquisition. General Mills paid $3.07 per share or $80.4 million for the option. It runs fro three years and has a strike price of $51.56. That will offset the dilution factor of the convertible offering, the company said.
Terms of the new deal are:
| Issuer: | General Mills Inc.
|
| Amount: | $1.35 billion (proceeds)
|
| Greenshoe: | $150 million (proceeds)
|
| Lead managers: | Banc of America Securities and Morgan Stanley
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| Maturity date: | Oct. 30, 2022
|
| Coupon: | 0%
|
| Issue price: | 67.165
|
| Conversion premium: | 25%
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| Conversion price: | $51.56
|
| Conversion ratio: | 13.0259
|
| Call: | Non-callable for three years
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| Put: | In years three, five, 10 and 15
|
| Contingent conversion: | 125% trigger declining by 0.25% every six months
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| Contingent payment: | 120% trigger
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| Expected ratings: | Moody's: Baa2
|
| S&P: BBB+
|
| Settlement Date: | Oct. 28
|
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