Nashville, March 18 - Saks Inc. sold $200 million of 20-year convertible notes at par to yield 2.0% with a 30% initial conversion premium via bookrunner Citigroup Global Markets Inc. The upscale retailer made the offering on a call spread to boost the effective conversion premium to 50% and thereby limit dilution impact.
The Rule 144A issue priced at the middle of yield talk for a 1.75% to 2.25% coupon and at the cheap end of premium guidance of 30% to 35%.
Holders will have full dividend protection by way of a conversion ratio adjustment.
Birmingham, Ala.-based Saks plans to use proceeds to repurchase or repay a portion of higher interest rate debt, from time to time, as interest rate changes provide attractive opportunities, and for general corporate purposes.
Terms of the deal are:
| Issuer: | Saks Inc.
|
| Issue: | Convertible senior notes
|
| Bookrunner: | Citigroup Global Markets Inc.
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| Amount: | $200 million
|
| Greenshoe: | $30 million
|
| Maturity: | March 15, 2024
|
| Coupon: | 2.0%
|
| Price: | Par
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| Yield: | 2.0%
|
| Conversion premium: | 30%
|
| Conversion price: | $21.18
|
| Conversion ratio: | 47.221
|
| Contingent conversion: | 120%
|
| Call: | Non-callable for 7 years
|
| Put: | In years 10 and 15
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| Ratings: | Moody's: Ba3
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| S&P: BB-
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| Fitch: BB
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| Price talk: | 1.75-2.25%, up 30-35%
|
| Pricing date: | March 17, after the close
|
| Settlement date: | March 23
|
| Distribution: | Rule 144A
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