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Genesee & Wyoming plans $200 million mandatory convertibles to yield 5%-5.5%, up 17.5%-22.5%
By Rebecca Melvin
New York, Sept. 12 - Genesee & Wyoming Inc. plans to price $200 million of three-year mandatory convertibles after the market close Thursday that were talked to yield 5% to 5.5% with an initial conversion premium of 17.5% to 22.5%, according to a syndicate source.
The company is also selling 3.5 million shares of common stock, including 233,996 shares of stock being sold by the chairman of the board of directors.
The registered mandatory convertibles deal includes a $30 million over-allotment option and is being sold via Bank of America Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.
The convertibles, or equity units, will mature in three years. They are provisionally callable if the price of shares exceeds 130% of conversion. There are no puts, but there is takeover protection.
Each unit will consist of a prepaid stock purchase contract and an amortizing note. Unless earlier redeemed or settled, each stock purchase contract will automatically settle on Oct. 1, 2015 for shares. The amortizing notes, which will pay in equal quarterly installments, will have a final installment payment on Oct. 1, 2015.
Proceeds will be used to fund partially the acquisition of RailAmerica Inc. If the acquisition is not consummated, the company plans to use proceeds from the offerings for general corporate purposes, including strategic investments and acquisitions. But the company can also redeem the units April 30, 2013 if the RailAmerica deal is not completed.
Genesee is a Greenwich, Conn.-based owner and operator of short line and regional freight railroads.
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