By Rebecca Melvin
New York, March 23 - Kaiser Aluminum Corp. priced an upsized $150 million of five-year convertible senior notes after the market close Tuesday at par to yield 4.5% with an initial conversion premium of 26%, according to a syndicate source.
The Rule 144A deal was originally talked at $130 million in size. The greenshoe was upsized to $25 million from $20 million.
Pricing came toward the rich end of talk, which was for a yield of 4.5% to 5% and an initial conversion premium of 22.5% to 27.5%.
The bonds are convertible at an initial price of about $48.32 per share.
J.P. Morgan Securities Inc. and Bank of America Merrill Lynch were the joint bookrunners, with Wells Fargo Securities as the co-manager.
The bonds will be non-callable for life with no puts.
Proceeds were expected to be used to repurchase $50 million of common stock, to purchase a call spread and for general corporate purposes.
Kaiser is repurchasing about $45 million of its outstanding common stock in privately negotiated, off-market transactions and has entered into convertible note hedge and warrant transactions.
The convertible note hedge transactions are expected to reduce Kaiser Aluminum's exposure to potential cash payments in excess of the principal amount of the notes that it may be required to make upon conversion, and the warrant transactions boost the effective initial conversion premium of the deal from the company's perspective to 60%.
Kaiser has also entered 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.
Based in Foothill Ranch, Calif., Kaiser is an aluminum products maker.
| Issuer: | Kaiser Aluminum Corp.
|
| Issue: | Convertible senior notes
|
| Amount: | $150 million, upsized from $130 million
|
| Greenshoe: | $25 million, upsized from $20 million
|
| Maturity: | 2015
|
| Bookrunners: | J.P. Morgan Securities Inc., Bank of America Merrill Lynch
|
| Co-manager: | Wells Fargo Securities
|
| Coupon: | 4.5%
|
| Price: | Par, $1,000
|
| Yield: | 4.5%
|
| Conversion premium: | 26%
|
| Conversion price: | $48.32
|
| Call option: | Non-callable
|
| Puts: | None
|
| Price talk: | 4.5%-5%, up 22.5%-27.5%
|
| Pricing date: | March 23
|
| Settlement date: | March 29
|
| Distribution: | Rule 144A
|
| Stock reference price: | $38.35
|
| Stock listing: | Nasdaq: KALU
|
| Market capitalization: | $767.8 million
|
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