AAR $100 million 20-year convertibles talked to yield 1.75%-2.25%, up 17.5%-22.5%

By Rebecca Melvin

Princeton, N.J., Jan. 25 - AAR Corp. plans to price $100 million of 20-year convertibles after the close on Thursday, according to a syndicate source.

The convertible senior notes were talked to yield 1.75% to 2.25% with an initial conversion premium of 17.5% to 22.5%.

Merrill Lynch is bookrunner for the Rule 144A deal.

There is a greenshoe of $25 million.

The notes have hard call protection for seven years, with put dates in years seven, 10 and 15.

The bonds also have full dividend and takeover protection, as well as contingent conversion at a trigger of 120%.

The company also announced that in the past two weeks it exchanged 2.025 million newly issued shares to acquire about $37.7 million, or 56%, of the principal amount of its existing 2.875% convertible senior notes due 2024.

Proceeds of the new offering are expected to be used to repurchase accounts receivable that have been securitized, to repay a portion of its higher interest rate debt, to fund future acquisitions and for general corporate purposes, the company said.

AAR is a Wood Dale, Ill.-based provider of products and services to the airline and defense industries.

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