By Ronda Fears
Nashville, May 20 - Kaydon Corp. sold an upsized $170 million of 20-year convertible notes at par to yield 4.0% with a 34% initial conversion premium via lead manager Deutsche Bank Securities Inc.
The Rule 144A deal, upsized from $150 million, sold at the aggressive end of guidance which had put the yield 4.0% to 4.5% with a 30% to 34% initial conversion premium.
Kaydon said proceeds would be used to repay about $72 million of revolving credit debt, make a $3 million payment to cash collateralize outstanding bank letters of credit, repurchase stock - including shares sold short by convertible buyers - and for future acquisitions and general corporate purposes.
In connection with the bank debt repayment, Kaydon will terminate its existing bank credit facility and intends to enter into negotiations with banks regarding a new credit agreement.
The company said its anticipated cash and cash equivalents of around $197 million after the transactions are sufficient to fund current operations and anticipated growth pending a new credit agreement.
Terms of the deal are:
Issuer: Kaydon Corp.
| Issue: | Convertible senior subordinated notes
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| Lead manager: | | Deutsche Bank Securities
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| Amount | $170 million, upped from $150 million
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| Greenshoe: | $30 million, unchanged
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| Maturity: | May 20, 2023
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| Coupon: | 4.0%
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| Price: | Par
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| Yield: | 4.0%
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| Conversion premium: | 34%
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| Conversion price: | $29.16
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| Conversion ratio: | 34.2936
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| Call: | Non-callable for five years
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| Put: | Years 5, 10 and 15
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| Contingent conversion: | 120%
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| Contingent payment: | 120%
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| Settlement: | May 23
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