Atlas Air’s $250 million of seven-year convertibles talked at 1.375%-1.875% yield, up 32.5%-37.5%

By Stephanie N. Rotondo

Seattle, May 17 – Price talk on Atlas Air Worldwide Holdings Inc.’s $250 million offering of convertible senior notes due 2024 emerged on Wednesday.

Talk was for a 1.375% to 1.875% yield and an initial conversion premium of 32.5% to 37.5%, according to a market source.

The offering was announced late Tuesday. Pricing is expected after Wednesday’s close.

Morgan Stanley & Co. LLC, BNP Paribas Securities Corp. and Citigroup Global Markets Inc. are the joint bookrunners.

The deal will include a $37.5 million 13-day over-allotment option.

Conversions will be settled in cash, common stock or a combination, at the company’s option. The notes will be contingently convertible prior to Sept. 1, 2023 and convertible at any time after that date.

The notes are non-callable.

In connection with the deal, Atlas will enter into one or more privately negotiated convertible note hedge transactions as well as separate privately negotiated warrant transactions with certain financial institutions.

Proceeds will be used to repay higher-cost revolving credit facility borrowings, to enhance business and financial flexibility, to support long-term growth, to fund the cost of hedging transactions and for general corporate purposes.

Atlas Air is a Purchase, N.Y.-based provider of outsourced aircraft and aviation operating services.

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