Blockbuster prices $150 million convertible preferreds to yield 7.5%, up 22.5%

New York, Nov. 8 - Blockbuster Inc. priced $150 million of cumulative convertible perpetual preferred stock to yield 7.5% with an initial conversion premium of 22.5%.

The deal, priced after the close Tuesday following a day of marketing, came at the middle of talk which put the yield at 7.25% to 7.75% with an initial conversion premium of 20% to 25%, according to a syndicate source.

There is a greenshoe of $22.5 million.

The size compares to the initial $100 million with a $15 million over-allotment option. But when it announced the deal, Blockbuster said the underwriters would offer a further $50 million of the convertibles to Blockbuster's 25 largest existing stock holders, based on public filings, who are qualified institutional buyers. Any unsold amount was to be rolled into the base deal.

On top of the $150 million priced, Blockbuster said affiliates of Carl Icahn have agreed to buy $38 million on the same terms.

Joint bookrunners for the Rule 144A deal are Citigroup and JP Morgan. Credit Suisse First Boston is co-manager.

The conversion price is $5.15 per share, a conversion ratio of 194.1748.

The cumulative convertible shares are non-callable for five years.

Blockbuster intends to use the proceeds to repay part of the borrowings on its revolving credit facility and for general corporate purposes.

The offering is being entered into in connection with amendments to Blockbuster's existing credit agreement made Nov. 4, which revise the agreement's covenants.

Dallas-based Blockbuster operates a chain of video rental stores.

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