By Rebecca Melvin
New York, March 1 - Stone Energy Corp. priced an upsized $275 million of five-year convertible notes at par late Wednesday to yield 1.75% with an initial conversion premium of 33.5%, according to a syndicate source.
The Rule 144A offering was initially going to be $250 million in size. The over-allotment option remained unchanged at $25 million.
The deal priced at the rich end of talk for the coupon, which was 1.75% to 2.25%, and beyond the rich end of 25% to 30% talk for the premium.
Barclays Capital Inc. and Bank of America Merrill Lynch were the joint bookrunners.
The notes are non-callable with no puts, and they have dividend and change-of-control protection.
The securities also have contingent conversion at a price hurdle of 130%.
In connection with the offering, the company entered into convertible note hedge and warrant transactions. The warrants have an initial strike price of $55.9125. That means this call spread boosts the bond's conversion premium from the issuer's perspective to 75%.
Proceeds will be used to fund the cost of the convertible note hedge transactions and for general corporate purposes, which may include providing longer-term financing for the recently closed Pompano, Wideberth and Appalachian acquisitions and repayment of outstanding borrowings under the company's bank credit facility.
Stone Energy is an independent oil and natural gas exploration and development company based in Lafayette, La.
| Issuer: | Stone Energy Corp.
|
| Issue: | Convertible senior notes
|
| Amount: | $275 million, upsized from $250 million
|
| Greenshoe: | $25 million
|
| Maturity: | March 1, 2017
|
| Bookrunners: | Barclays Capital Inc., Bank of America Merrill Lynch
|
| Coupon: | 1.75%
|
| Price: | Par, $1,000
|
| Yield: | 1.75%
|
| Conversion premium: | 33.5%
|
| Conversion price: | $42.65
|
| Conversion ratio: | 23.4449
|
| Concurrent warrant strike: | $55.9125
|
| Call protection: | Non-callable for life
|
| Puts: | None
|
| Contingent conversion: | Yes, at 130%
|
| Price talk: | 1.75%-2.25%, up 25%-30%
|
| Takeover protection: | Yes
|
| Dividend protection: | Yes
|
| Pricing date: | Feb. 29
|
| Settlement date: | March 6
|
| Distribution: | Rule 144A
|
| Stock symbol: | NYSE: SGY
|
| Stock reference price: | $31.95
|
| Market capitalization: | $1.6 billion
|
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