By Rebecca Melvin
Princeton, N.J., Sept. 6 - Kudelski SA of Switzerland priced CHF 350 million of seven-year bonds at par to yield 1.625% with an initial conversion premium of 36%.
Coinciding with the issue, Kudelski announced a tender offer for an existing convertible bond due 2009.
The new issue, sold via bookrunner Goldman Sachs & Co. Bank, priced at the low end of talk for a coupon of 1.625% to 2.125% and at the low to mid range for the initial conversion premium of 34% to 39%.
Goldman Sachs is also joint lead manager together with Zurcher Kantonalbank.
The bonds, which include a CHF 50 million greenshoe, are callable after five years, subject to a 110% trigger.
Based in Cheseaux-sur-Lausanne, Switzerland, Kudelski is a digital security company.
Proceeds are expected to be used to tender for the $158 million outstanding of its existing 2.25% convertible. Remaining proceeds are expected to be used for acquisitions and general corporate purposes.
Analysts for Barclays Capital in London said the convertibles priced at fair value, given a volatility estimate of 25% and a credit spread of 200 basis points over Libor.
"For the credit spread, we looked at the existing, out of the money Kudelski convertible due 2009, which has a put in January 2007. This bond's price implies a credit spread of roughly 150 bps, but we caution that it has been quite illiquid. Allowing for the credit term structure, we would estimate a seven-year spread of at least 200 bps," the analysts said via e-mail.
"Using these assumptions, we value the new issue at 100.1 with a 50% delta, which equates to an implied volatility of 24.8% versus issue price. We therefore believe the issue offers fair value at issue price, given the final pricing terms," the analysts said.
| Issuer: | Kudelski SA
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| Issue: | Unsubordinated convertible bonds
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| Amount: | CHF 350 million
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| Greenshoe: | CHF 50 million
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| Bookrunner: | Goldman Sachs & Co. Bank
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| Maturity: | 2012
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| Coupon: | 1.625%
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| Price: | Par
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| Yield: | 1.625%
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| Conversion premium: | 36%
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| Conversion price: | CHF 67.76
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| Calls: | Callable after five years, subject to 110% trigger
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| Pricing date: | Sept. 6
|
| Price talk: | Coupon: 1.625%-2.125%
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| Premium: 34%-39%
|
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