By Rebecca Melvin
New York, March 29 - Goodyear Tire & Rubber Co. priced $435 million of three-year mandatory convertible preferred stock, or 8.7 million shares with a liquidation price of $50.00 per share, late Monday for a 5.875% dividend and a 25% initial conversion premium, according to a syndicate source.
The registered, off-the-shelf deal came toward the rich end of revised dividend talk of 5.75% to 6.25% and at the tightened price point for the premium.
Original talk when the deal was launched early Monday was for a 6% to 6.5% dividend and a 20% to 25% initial conversion premium.
There is a greenshoe for an additional $65 million, or 1.3 million shares.
The mandatory will convert automatically on April 1, 2014 and has dividend and takeover protection.
Proceeds from the offering will be used to redeem $350 million of Goodyear's 10.5% senior straight notes due May 15, 2016 at 110.5% of the principal amount plus interest.
Remaining proceeds will be used for general corporate purposes, which may include repaying debt.
Goldman Sachs & Co., J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Credit Agricole Securities (USA) Inc. will be the joint bookrunners for the offering, with BNP Paribas Securities Corp., HSBC Securities (USA) Inc. and Natixis as the co-managers.
Goodyear is an Akron, Ohio-based tire maker.
| Issuer: | Goodyear Tire & Rubber Co.
|
| Issue: | Convertible mandatory preferreds
|
| Amount: | $435 million (8.7 million shares)
|
| Greenshoe: | $65 million, (1.3 million shares)
|
| Maturity: | April 1, 2014
|
| Bookrunners: | Goldman Sachs & Co., J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc.
|
| Co-managers: | BNP Paribas Securities Corp., HSBC Securities (USA) Inc., Natixis
|
| Dividend: | 5.875%
|
| Price: | Par, $50.00
|
| Yield: | 5.875%
|
| Conversion premium: | 25%
|
| Conversion price: | $18.2125
|
| Minimum conversion rate: | 2.7454
|
| Maximum conversion rate: | 3.4317
|
| Price talk: | 5.75%-6.25%, up 25%, revised from 6%-6.5%, up 20%-25%
|
| Takeover protection: | Yes
|
| Pricing date: | March 28
|
| Settlement date: | March 31
|
| Stock reference price: | $14.57
|
| Stock symbol: | NYSE: GT
|
| Distribution: | Registered, off the shelf
|
| Market capitalization: | $3.54 billion
|
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