By Kenneth Lim
Boston, April 12 - Medtronic Inc. priced its $4 billion dual-tranche offering of convertible senior unsecured notes due 2011 and 2013 at the middle to cheap end of talk with a coupon of 1.5% for the five-year paper and 1.625% for the seven-year. The initial conversion premium is 10% for both tranches.
All the convertibles were offered at par. The five-year notes were talked at a coupon of 0.75% to 1.5%, while the seven-year securities at a coupon of 1% to 1.75%. Each $2 billion tranche has an over-allotment option of a further $200 million.
Medtronic will also carry out convertible note hedge and warrant transactions and expects the warrants to have an exercise price at a 50% premium to the common stock price.
Morgan Stanley, Bank of America, Merrill Lynch, Citigroup, Deutsche Bank and Goldman Sachs were the bookrunners of the Rule 144A deal, the second-biggest so far this year after Amgen Inc.'s $5 billion offering in February.
All the convertibles will be non-callable for life, and there are no puts.
Contingent conversion is allowed if the stock price exceeds 140% of the conversion price.
The convertible bonds have full dividend and takeover protection. There is a net-share settlement feature.
Moody's Investors Service has rated the notes A1, while Standard and Poor's is expected to rate them Aa-.
Medtronic, a Minneapolis-based medical device maker, said it will buy back about $2.5 billion of its own stock using the proceeds. The repurchase amounts exceed the outstanding 36 million shares in its current stock buyback program. Part of the proceeds will also be used to fund the convertible note hedge transactions. Any remaining proceeds will be used for general corporate purposes.
| Issuer: | Medtronic Inc.
|
| Issue: | Convertible senior unsecured notes
|
| Bookrunner: | Morgan Stanley, Bank of America, Merrill Lynch, Citigroup, Deutsche Bank, Goldman Sachs
|
| Pricing date: | April 12
|
| Settlement date: | April 13
|
| Distribution: | Rule 144A
|
| Ratings: | Moody's: A1; S&P: Aa-
|
|
|
| Five-year
|
| Amount: | $2 billion
|
| Greenshoe: | $200 million
|
| Maturity: | April 15, 2011
|
| Price: | Par
|
| Yield: | 1.5%
|
| Conversion premium: | 10%
|
| Conversion price: | $56.144
|
| Conversion ratio: | 17.8113
|
| Contingent conversion: | 140%
|
| Net-share settlement: | Yes
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Call protection: | Non-callable for life
|
| Puts: | None
|
| Price talk: | 0.75%-1.5%, up 10%
|
|
|
| Seven-year
|
| Amount: | $2 billion
|
| Greenshoe: | $200 million
|
| Maturity: | April 15, 2013
|
| Price: | Par
|
| Yield: | 1.625%
|
| Conversion premium: | 10%
|
| Conversion price: | $56.14
|
| Conversion ratio: | 17.8113
|
| Contingent conversion: | 140%
|
| Net-share settlement: | Yes
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Call protection: | Non-callable for life
|
| Puts: | None
|
| Price talk: | 1%-1.75%, up 10%
|
|
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