Massey Energy talks $600 million seven-year convertibles at 3%-3.5%, up 40%-45% for Wednesday

By Kenneth Lim

Boston, Aug. 5 - Massey Energy Co. plans to price $600 million of seven-year convertible senior notes on Wednesday after the market closes, talked to yield 3% to 3.5% with an initial conversion premium of 40% to 45%, according to market sources.

The convertibles will be offered at par.

There is an over-allotment option for an additional $90 million.

UBS Investment Bank and J.P. Morgan Securities Inc. are the bookrunners of the registered off-the-shelf offering.

There will be a concurrent $250 million placement of common stock with a greenshoe for a further $37.5 million. The bookrunners will be the same for the stock and convertible offerings.

The convertibles will be non-callable and may not be put.

There will be dividend and takeover protection.

Massey Energy, a Richmond, Va.-based coal producer, said it will use the proceeds of both deals to fund the repurchase of its 6.625% senior notes due 2010 and for general corporate purposes.

Massey Energy on Tuesday made a cash tender offer for its outstanding $335 million worth of 6.625% senior notes due 2010. The company is offering $1,016.56 plus interest for each of the $1,000 par notes to holders who tender by Aug. 18, and the same amount less $25 for those who tender after that. The tender offer expires at midnight ET of Sept. 2.

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