Stanley Black & Decker offers $550 million convertible preferreds at 4.75%-5.25%, up 17.5%-22.5%

By Rebecca Melvin

New York, Nov. 1 - Stanley Black & Decker Inc. plans to price $550 million of convertible preferred units at $100 each on Tuesday that are being talked with a dividend of 4.75% to 5.25% and with an initial conversion premium of 17.5% to 22.5%, according to a syndicate source.

The offering, being made under an effective registration, has an over-allotment option for the sale of additional units.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. Inc. are the joint bookrunners.

Each preferred unit will consist of a purchase contract including 10% of a junior subordinated note due Nov. 17, 2018. Stanley Black & Decker has applied to list the convertible preferred units on the New York Stock Exchange under the symbol "SWU."

Proceeds will be used to redeem Stanley Black & Decker's 5.902% fixed-rate/floating-rate junior subordinated debt securities due 2045, to improve the funded status of its pension obligations, to reduce outstanding short-term borrowings and for other general corporate purposes.

The company also intends to use a portion of the unit proceeds to enter into capped call transactions with counterparties, which will raise the effective conversion premium from the issuer's perspective to about 60%.

New Britain, Conn.-based Stanley Black & Decker is a provider of hand tools, power tools and related accessories.

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