Tyson Foods talks $450 million five-year convertibles to yield 3.25%-3.75%, up 27.5%-32.5%

By Rebecca Melvin

New York, Sept. 4 - Tyson Foods Inc. plans to price $450 million of five-year convertibles after the market close Wednesday talked to yield 3.25% to 3.75% with an initial conversion premium of 27.5% to 32.5%, according to a syndicate source.

J.P. Morgan Securities Inc. and Merrill Lynch & Co. are joint bookrunners of the registered offering of convertible senior notes.

The notes will be non-callable for life and have no puts.

Concurrently, Tyson plans to price 20 million shares of class A common stock. The offerings are not contingent on each other.

There is a greenshoe of $67.5 million of convertibles and up to 3 million of additional common shares.

An entity controlled by Don Tyson, the company's former chairman and current director, has indicated it intends to purchase 3 million shares.

Proceeds are expected to be used to repay portions of the outstanding borrowings under Tyson's accounts receivable credit facility and for other general corporate purposes such as acquisitions, strategic investments and initiatives to grow the company's business.

A portion of proceeds will be used to enter into convertible note hedge and warrant transactions aimed a reducing potential dilution from the conversion of the notes.

The cost to Tyson of the convertible hedge transactions will be offset partially by the warrant transactions.

Springdale, Ark.-based Tyson is a processor and marketer of chicken, beef and pork.

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