Nashville, April 15 - Walter Industries Inc. sold an upsized $150 million of 20-year convertible senior subordinated notes at par to yield 3.75% with a 37.5% initial conversion premium via joint bookrunners Morgan Stanley & Co. and Banc of America Securities.
The Rule 144A deal, upped from $125 million, priced at the middle of guidance for a 3.5% to 4.0% coupon and a 35% to 40% initial conversion premium.
There is a conversion trigger if the rating on the issue falls below its initial credit rating by Standard & Poor's or Moody's Investors Service.
Holders of the convertible notes will have dividend protection for common stock cash distribution over 3 cents per share per quarter.
The Tampa, Fla.-based homebuilder intends to use proceeds, together with available cash or borrowings under its senior secured bank revolver, to prepay in full the $113.8 million outstanding term loan portion of its senior secured credit facilities plus fees and accrued interest on that loan.
In addition, Walter Industries has earmarked about $10 million of proceeds to purchase shares sold short by convertible note purchasers.
Walter Industries has also agreed to use some $25 million to purchase shares owned by certain affiliates of Kohlberg Kravis Roberts & Co., which together currently hold around 33.3% of Walter Industries stock, at an agreed price of $12.75 per share.
Any remaining proceeds or borrowings will be used for general corporate purposes including additional share repurchases of up to $25 million, which could be privately negotiated purchases of shares from KKR affiliates.
There is a 90-day lockup associated with the convertible offering for Walter Industries employees and directors, as well as KKR affiliates who own the stock.
Terms of the deal are:
| Issuer: | Walter Industries Inc.
|
| Issue: | Convertible senior subordinated notes
|
| Bookrunners: | Morgan Stanley & Co. and Banc of America Securities
|
| Co-managers: | SunTrust Robinson Humphrey, BNP Paribas and Credit Lyonnais
|
| Amount: | $150 million, up from $125 million
|
| Greenshoe: | $25 million, unchanged
|
| Maturity: | May 1, 2024
|
| Coupon: | 3.75%
|
| Price: | Par
|
| Yield: | 3.75%
|
| Conversion premium: | 37.5%
|
| Conversion price: | $17.85
|
| Conversion ratio: | 56.0303
|
| Contingent conversion: | 130%
|
| Contingent payment: | 120%
|
| Call: | Non-callable for 7 years
|
| Put: | In years 10 and 15, at par
|
| Rating: | Moody's: B1
|
| Price talk: | 3.5-4.0%, up 35-40%
|
| Pricing date: | April 14, after the close
|
| Settlement date: | April 20
|
| Distribution: | Rule 144A
|
|
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
