By Rebecca Melvin
New York, Sept. 10 - Tyson Foods Inc. priced $450 million of five-year convertibles after the market close Tuesday at par to yield 3.25% with an initial conversion premium of 32.5%, according to a news release.
The notes priced at the rich end of talk, which was 3.25% to 3.75% for the coupon and 27.5% to 32.5% for the premium.
J.P. Morgan Securities Inc. and Merrill Lynch & Co. were joint bookrunners of the registered offering of convertible senior notes, which will be non-callable for life, with no puts. There is contingent conversion subject to a 130% price hurdle.
Concurrently, Tyson priced 20 million shares of class A common stock at $12.75 per share.
There is a greenshoe of $67.5 million of convertibles and up to 3 million of additional common shares.
Proceeds of both offerings are expected to be used to repay borrowings under Tyson's accounts receivable securitization and for other general corporate purposes, including acquisitions, strategic investments and initiatives to grow its 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. They will raise the effective conversion premium from Tyson's perspective to 75%.
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.
| Issuer: | Tyson Foods Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $450 million
|
| Greenshoe: | $67.5 million
|
| Concurrent offering: | 20 million of common shares at $12.75 a share
|
| Maturity: | Oct. 15, 2013
|
| Bookrunners: | J.P. Morgan Securities Inc. and Merrill Lynch & Co.
|
| Coupon: | 3.25%
|
| Price: | Par
|
| Yield: | 3.25%
|
| Conversion premium: | 32.5%
|
| Conversion ratio: | 59.1935
|
| Conversion price: | $16.89
|
| Price talk: | 3.25%-3.75%, up 27.5%-32.5%
|
| Call: | Non-callable for life
|
| Puts: | No puts
|
| Contingent conversion: | Yes, subject to a 130% price hurdle
|
| Net share settlement: | Yes
|
| Pricing date: | Sept. 9, after the close
|
| Settlement date: | Sept. 15
|
| Distribution: | Registered
|
| Stock symbol: | NYSE: TSN
|
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