SBA Communications to price $500 million five-year convertibles to yield 1.375%-1.875%, up 20%-30%

By Rebecca Melvin

New York, May 12 - SBA Communications Corp. planned to price $500 million of five-year convertible senior notes after the market close Monday, according to a syndicate source.

The Rule 144A notes were talked to yield 1.375% to 1.875% with an initial conversion premium of 20% to 30%.

There is a $50 million over-allotment option.

Citigroup, Deutsche Bank and Lehman Brothers are underwriting the offering.

The notes are non-callable, and there are no puts. There is contingent conversion subject to a 130% hurdle.

SBA intends to use a portion of proceeds to enter into convertible note hedge and warrant transactions, with an anticipated initial strike price on the warrant transactions equivalent to 195% of the closing price of its common stock on the pricing date, according to a company news release.

From proceeds from the sale of the notes and the warrants, SBA intends to use up to $150 million to repurchase common stock.

Remaining net proceeds will be used to repay debt, to fund the acquisition costs of SBA's recently announced TowerCo transaction, to finance future acquisitions or construction of towers and the purchase or extension of leases of land underneath its towers, to fund additional stock repurchases, and for general corporate purposes.

Boca Raton, Fla.-based SBA is an owner and operator of wireless communications infrastructure.

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