King Pharmaceuticals to offer $400 million of 20-year convertibles talked at 0.75%-1.25%, up 20%-25%

By Kenneth Lim

Boston, March 22 - King Pharmaceuticals Inc. plans to offer $400 million of 20-year convertible senior notes talked at a coupon of 0.75% to 1.25% and an initial conversion premium of 20% to 25%, market sources confirmed.

The convertibles are being offered at par and are expected to price on Thursday after the market closes.

Citigroup, UBS Investment Group and Banc of America Securities are the bookrunners of the Rule 144A deal. They have a greenshoe option to purchase a further $60 million of notes.

The convertibles will be non-callable for the first seven years, and have puts in years seven, 10 and 15.

There is a contingent conversion trigger at 110% and contingent payment at 120%.

The securities have dividend protection and takeover protection in the form of a premium make-whole feature and a change-of-control put.

The convertibles also have a net-share settlement feature.

The Bristol, Tenn.-based pharmaceutical company has earmarked the proceeds of the deal to redeem or repurchase its existing 2.75% convertibles due 2021, of which $345 million remain outstanding. It will also use the proceeds for general corporate purposes.

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