Avantor talks $500 million mandatory convertible preferreds to yield 5.75%-6.25%, up 17.5%-22.5%

By Abigail W. Adams

Portland, Me., May 9 – Avantor Inc. plans to price $500 million, or 10 million shares, of $50-par three-year series A mandatory convertible preferreds after the market close on May 16 with talk for a dividend of 5.75% to 6.25% and a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, BofA Merrill Lynch, Barclays and Jefferies & Co. are the bookrunners for the registered offering, which carries a greenshoe of $75 million, or 1.5 million shares.

Net proceeds from the mandatory convertible preferreds are expected to be $481 million, or $553.4 million if the greenshoe is exercised in full.

The deal is pricing concurrently with Avantor’s initial public offering of stock. Avantor intends to price 153,999,900 shares at a price between $18.00 and $21.00 per share.

Approximately $2.63 billion of the net proceeds from the combined offerings will be used to redeem outstanding senior preferred stock with the remaining proceeds to be used to repay the $471.2 million and $269.7 million outstanding under its term loan facilities, according to an S-1 filing with the Securities and Exchange Commission.

Avantor is a Radnor, Pa.-based manufacturer and marketer of materials for the life sciences, pharmaceutical, biomaterial, and research/diagnostic markets.

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