CenterPoint Energy $400 million convertibles talked to yield 4.0%-4.5%, up 40%-45%

By Ronda Fears

Nashville, May 12 - CenterPoint Energy Inc. launched $400 million of 20-year senior unsecured convertible notes after the close with guidance for a 4.0% to 4.5% coupon and 40% to 45% initial conversion premium.

The Rule 144A deal is set to price after Tuesday's close, via joint lead managers Banc of America Securities, Citigroup and JPMorgan.

The 20-year senior unsecured notes will be non-callable for five years, with puts in years 5, 10 and 15 payable in cash only.

There is a 120% contingent conversion trigger, which steps down to 110% at year five. There also is a contingent payment trigger of 120%.

There is a $60 million greenshoe available.

This issue is expected to be rated Ba1 by Moody's Investors Service and BBB- by Standard & Poor's Corp.

CenterPoint Energy said it plans to use proceeds to repay outstanding borrowings under its $3.8 billion credit facility.

CenterPoint Energy shares closed Monday up 3c, or 0.38%, to $8.

CenterPoint Energy was formed in 2002, when Reliant Energy Inc. separated into two publicly traded companies - CenterPoint Energy Inc. and Reliant Resources Inc.

Also on Monday, Reliant Resources and the Securities and Exchange Commission reached a settlement on allegations of round-trip trades similar to those that brought down Enron Corp.

Reliant did not admit or deny any wrongdoing. There were no fines levied under the settlement. Instead, the SEC ordered the company to refrain from further violations of securities laws.

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