Kaiser Aluminum plans $130 million of five-year convertibles to yield 4.5%-5%, up 22.5%-27.5%

By Rebecca Melvin

New York, March 22 - Kaiser Aluminum Corp. launched an offering of $130 million of five-year convertible senior notes that is expected to price Tuesday after the market close. The convertibles are talked to yield 4.5% to 5% with an initial conversion premium of 22.5% to 27.5%, according to a market source.

The Rule 144A deal will have an over allotment option of $20 million and is being sold via bookrunners J.P. Morgan Securities and Bank of America Merrill Lynch, with Wells Fargo as co-manager.

The bonds will be non-callable for life with no puts.

Proceeds are expected to be used to repurchase $50 million of common stock concurrent with the offering, to purchase a call spread and for general corporate purposes.

In connection with the offering, Kaiser Aluminum also expects to terminate an existing $265 million senior secured revolving credit facility and enter into a new $200 million, four year senior secured revolving credit facility providing for borrowings based upon advances against eligible accounts receivable and eligible inventory. The new credit facility is expected to close simultaneously with the pricing of the convertible notes.

Headquartered in Foothill Ranch, Calif., Kaiser is an aluminum products maker.

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