By Rebecca Melvin
New York, July 24 - Alliance Data Systems Corp. priced $700 million of five-year convertible senior unsecured notes on Wednesday at par to yield 1.75% with an initial conversion premium of 22.5%, according to a news release.
The notes priced toward the cheap end of talk for the coupon, which was 1.375% to 1.875%, and at the midpoint of talk for the initial conversion premium.
There is an over-allotment option for an additional $105 million.
Banc of America Securities LLC, J.P. Morgan Securities Inc. and Wachovia were bookrunners for the Rule 144A offering.
The convertibles are non-callable and may not be put.
There will be dividend and takeover protection.
The company plans to use proceeds to buy back $300 million of its shares, to pay about $105 million for convertible note hedge transactions, to repay two outstanding credit agreements in full and to free up borrowing capacity.
Alliance Data has also entered into convertible note hedge transactions in connection with the notes offering and separate warrant transactions with the hedge counterparties, which will result in additional proceeds to Alliance Data.
The warrants have an exercise price that is about 75% higher than the closing price of Alliance Data's common stock on July 23.
Alliance is a Dallas-based marketing services company.
| Issuer: | Alliance Data Systems Corp.
|
| Issue: | Convertible senior unsecured notes
|
| Bookrunners: | Banc of America Securities LLC, J.P. Morgan Securities Inc. and Wachovia
|
| Amount: | $700 million
|
| Greenshoe: | $105 million
|
| Maturity: | Aug. 1, 2013
|
| Coupon: | 1.75%
|
| Price: | Par
|
| Yield: | 1.75%
|
| Conversion premium: | 22.5%
|
| Conversion ratio: | 12.7392
|
| Conversion price: | $78.50
|
| Price talk: | 1.375%-1.875%, up 20%-25%
|
| Calls: | Non-callable
|
| Puts: | No puts
|
| Pricing date: | July 23
|
| Distribution: | Rule 144A
|
| Stock symbol: | Nasdaq: ADS
|
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