Air Transport greenshoe grows 1.125% convertibles to $258.75 million

By Angela McDaniels

Tacoma, Wash., Sept. 29 – The underwriters of Air Transport Services Group Inc.’s 1.125% convertible senior notes due 2024 exercised their $33.75 million over-allotment option in full, increasing the size of the issue to $258.75 million.

As previously reported, the company priced $225 million of the convertibles on Sept. 25 at par with an initial conversion premium of 35%.

The yield priced tighter than the 1.25% to 1.75% talk. The conversion premium came in the middle of the 32.5% to 37.5% talk.

The deal was increased from an expected $200 million, and the greenshoe was increased from $30 million.

Goldman Sachs & Co. was the left lead bookrunner on the Rule 144A deal. SunTrust Robinson Humphrey Inc. was also an active bookrunner.

Conversions will be settled in cash, unless the company amends its certificate of incorporation to increase the amount of authorized common shares. If such an amendment occurs, conversions will be settled in cash, common stock or both, at the company’s option.

The notes are contingently convertible prior to April 15, 2024. After that, the issue is convertible at any time.

The convertibles become putable in certain circumstances.

In connection with the offering, Air Transport entered into privately negotiated convertible note hedge transactions with one or more financial institutions. The company also entered into separate privately negotiation warrant transactions with the option counterparties.

The warrants are exercisable at $41.3525 a share, a 75% premium over Sept. 25’s closing share price of $23.63.

A portion of the deal’s proceeds will be used to pay for the hedging transactions. The remaining funds will be used to repay part of the company’s outstanding borrowings under its $545 million revolving credit facility and for general corporate purposes.

Air Transport is a Wilmington, Ohio-based provider of aircraft leasing and air cargo transportation and related services to domestic and foreign air carriers and other companies that outsource their air cargo lift requirements.

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