Marriott Vacations talks $500 million five-year convertibles to yield 0%-0.5%, up 32.5%-37.5%

By Abigail W. Adams

Portland, Me., Jan. 26 – Marriott Vacations Worldwide Corp. plans to price $500 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

J.P. Morgan Securities LLC and BofA Securities Inc. are active bookrunners for the Rule 144A offering, which carries a greenshoe of $75 million.

The notes are non-callable.

They will be settled in cash, shares or a combination of both at the company’s option.

The notes will be unsecured but guaranteed by Marriott Ownership Resorts Inc.

In connection with the pricing of the notes, the company will enter into convertible note hedge and warrant transactions.

Proceeds will be used to cover the cost of the hedge transactions, to finance the acquisition of Welk Resorts, to repay certain Welk Resorts debut, to repay a portion of the company’s term loan and for general corporate purposes.

Marriott previously announced its intention to acquire Welk Resorts for $430 million in cash and 1.4 million shares of common stock.

Marriott Vacations is an Orlando, Fla.-based global vacation company.

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