Kansas City Southern's roughly $210 million convertibles talked to yield 5.25%-5.75%, up 21.5%

By Rebecca Melvin

Princeton, N.J., Dec. 5 - Kansas City Southern was expected to price an overnight convertible preferred offering Tuesday before the open, according to market sources.

The registered offering of about $210 million of preferreds was talked to yield 5.25% to 5.75% with an initial conversion premium of 21.5%, the sources said.

The perpetual shares, being sold via bookrunner Morgan Stanley, have a liquidation preference of $1,000. They are non-callable for five years with an issuer option to force conversion at 130% of the conversion price after five years. They also have dividend protection.

Most of the proceeds will be used to purchase 9 million shares of Kansas City Southern common stock from Grupo TMM SA, the company said in a press release.

Concurrently with the preferred offering, TMM is offering 9 million shares of common stock in a separate offering.

Located in Kansas City, Mo., Kansas City Southern is a transportation holding company that has railroad investments in the United States, Mexico and Panama. Its primary U.S. holdings include The Kansas City Southern Railway Co. and Texas Mexican Railway Co.

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