New Issue: Klöckner & Co. prices €325 million convertible bonds due 2012 with 1.5% coupon, up 35%

By Evan Weinberger

New York, July 18 - Klöckner & Co AG priced €325 million in senior unsecured convertible bonds due 2012 with a coupon of 1.5% and an initial conversion premium of 35% Wednesday after market close.

The bonds came in at the mid-range of talk, which had the coupon at 1% to 2% and the initial conversion premium at 35%.

Deutsche Bank and JPMorgan are joint bookrunners of the Regulation S transaction.

There is a €25 million over-allotment option. Klöckner took advantage of the ability to upsize the originally announced €300 million by €25 million.

The conversion price is €80.75. The bonds are offered at par.

The bonds will be issued through Klöckner & Co Finance International S.A., a wholly-owned Luxembourg subsidiary of Klöckner & Co. The bonds will be convertible into Klöckner & Co common stock.

The bonds are callable after three years subject to a 130% hurdle.

Klöckner & Co is a Duisburg, Germany-based steel and metal distributor. The company plans to use the proceeds for general corporate purposes and for external expansion.

Issuer: Klöckner & Co AG

Issue: Senior unsecured convertible bonds

Amount: €325 million

Greenshoe: €25 million

Maturity: 2012

Coupon: 1.5%

Price: Par

Yield: 1.5%

Conversion price: €80.75

Conversion premium: 35%

Call: After three years, subject to 130% hurdle

Pricing date: July 18

Closing date: July 27

Bookrunners: Deutsche Bank and JPMorgan

Talk: 1% to 2% coupon, 35% conversion premium

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