By Ronda Fears
Memphis, March 23 - Komag Inc. priced an upsized offering of seven-year convertible senior subordinated notes after Thursday's close at par with a coupon of 2.125% and initial conversion premium of 77%. It priced at the aggressive end of revised yield talk and the cheap end of revised premium guidance.
The issue was increased from $200 million.
There is an over-allotment option for a further $30 million, unchanged.
Credit Suisse is bookrunner of the Rule 144A offering.
Revised price talk put the coupon at 2.125% to 2.375% and initial conversion premium at 75% to 77%, which was tightened from original price talk for a coupon of 2.375% to 2.875% with an initial conversion premium of 73% to 77%.
The issue includes embedded warrants equal to 0.75 times the number of underlying shares. If, at the time of conversion, the applicable price of Komag stock exceeds the base conversion price, holders will receive up to an additional 13.2836 shares per note.
The San Jose, Calif., data storage device maker intends to use proceeds to repurchase common stock in connection with this offering.
The notes are non-callable; there are no puts.
There is dividend and change-of-control protection, including compensation for warrants as well.
The notes are subordinated to all present and future senior debt of Komag, except that the notes will be pari passu with Komag's existing 2% convertible subordinated notes due 2024.
Komag said it also plans to use proceeds to redeem its 2% convertible subordinated notes due 2024 to the extent not converted, and any remaining proceeds for general corporate purposes, which may include additional stock buybacks.
| Issuer: | Komag Inc.
|
| Issue: | Convertible senior subordinated notes
|
| Bookrunner: | Credit Suisse
|
| Co-managers: | Bear Stearns, Citigroup and Piper Jaffray
|
| Amount: | $220 million, up from $200 million
|
| Greenshoe: | $30 million, unchanged
|
| Maturity: | 2014
|
| Coupon: | 2.125%
|
| Price: | Par
|
| Yield: | 2.125%
|
| Conversion premium: | 77%
|
| Conversion price: | $58.00
|
| Conversion ratio: | 17.2414
|
| Contingent conversion: | No
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Call protection: | Non-callable
|
| Puts: | No
|
| Price talk: | Revised: 2.125%-2.375%, up 75%-77%
|
| Original: 2.375%-2.875%, up 73%-77%
|
| Pricing date: | March 22, after the close
|
| Settlement date: | March 28
|
| Distribution: | Rule 144A
|
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