By Rebecca Melvin
New York, May 16 - TAL Education Group priced $200 million of five-year convertible notes at par after the market close Thursday to yield 2.5% with an initial conversion premium of 30%, according to market sources.
Pricing of the Rule 144A and Regulation S deal came at the midpoint of talk, which was for a 2.25% to 2.75% coupon and a 27.5% to 32.5% premium.
Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the joint bookrunners of the notes, which have an over-allotment option for up to an additional $30 million of notes.
TAL cannot call the bonds, but holders can put the notes on May 15, 2017. There is a takeover put at 100% of principal plus interest.
The company also entered into capped call transactions with one or more initial purchasers of the bonds. The cap price of the capped call will initially be $35.39 per ADS, which boosts the premium from the issuer's perspective to about 75%.
About 10% of the proceeds will be used to pay the net cost of the capped call; remaining proceeds will be for strategic investments and general corporate purposes.
TAL is a Beijing-based provider of after-school tutoring services.
| Issuer: | TAL Education Group
|
| Issue: | Convertible senior notes
|
| Amount: | $200 million
|
| Greenshoe: | $30 million
|
| Maturity: | May 15, 2019
|
| Bookrunners: | Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC
|
| Coupon: | 2.5%
|
| Price: | Par
|
| Yield: | 2.5%
|
| Conversion premium: | 30%
|
| Conversion price: | $26.29
|
| Conversion ratio: | 38.0431
|
| Call protection: | Non-callable
|
| Puts: | On May 15, 2017
|
| Takeover protection: | Yes, at par plus accrued interest
|
| Capped call: | Yes, strike on capped call will initially be $35.39 per ADS, which represents an initial premium of 75% from the issuer's perspective
|
| Price talk: | 2.25%-2.75%, up 27.5%-32.5%
|
| Pricing date: | May 15
|
| Settlement date: | May 21
|
| Distribution: | Rule 144A and Regulation S
|
| Stock symbol: | NYSE: ADS: XRS
|
| Stock reference price: | $20.22
|
| Market capitalization: | $1.65 billion
|
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