Blackhawk greenshoe exercised, lifts 1.5% convertibles to $500 million

By Marisa Wong

Morgantown, W.Va., July 28 – Blackhawk Network Holdings Inc. closed the sale of $500 million of 1.5% convertible senior notes on Wednesday. The total issue amount includes $40 million of notes from the full exercise of the underwriters’ over-allotment option, according to an 8-K filed Thursday with the Securities and Exchange Commission.

The company priced an upsized $460 million of 5.5-year convertible senior notes after the market close on July 21 to yield 1.5% with an initial conversion premium of 42.5%, as previously reported.

The Rule 144A deal was initially talked at $425 million in size. The greenshoe was upsized to $40 million from $35 million of notes.

Pricing came at the rich end and beyond the rich end of talked terms, which was for a 1.5% to 2% coupon and 35% to 40% premium.

Joint bookrunners are BofA Merrill Lynch, Wells Fargo Securities LLC, SunTrust Robinson Humphrey Inc. and MUFG.

The notes are non-callable with no puts and have full dividend protection via conversion ratio adjustment and change-of-control protection.

There is contingent conversion if shares exceed 130% of the conversion price, and there is net share settlement.

In connection with the pricing of the notes, Blackhawk entered into convertible note hedge and warrant transactions with one or more of the initial purchasers of the notes or their affiliates. About $26.5 million of net proceeds will be used to pay the net cost of the call spread.

About $372 million of proceeds are earmarked to repay borrowings under the company’s credit facility, with the remainder to be used to buy back shares of its common stock from certain purchasers of the notes, to pay related transaction fees and expenses and for general corporate purposes, including future acquisitions.

About $35 million of net proceeds will be used to repurchase common shares in privately negotiated transactions concurrently with the offering of notes.

Pleasanton, Calif.-based Blackhawk is a prepaid, gift card and payments services company.

© 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.