By Kenneth Lim
Boston, Jan. 26 - Covanta Holding Corp. on Thursday priced $325 million of 20-year convertible senior debentures within talk, at a coupon of 1% and an initial conversion premium of 20%.
The debentures were offered at par. They were talked at a coupon of 1% to 1.5% and an initial conversion premium of 17.5% to 22.5%.
There is an over-allotment option for a further $48.75 million.
Lehman Brothers, JP Morgan and Merrill Lynch were the bookrunners of the registered off-the-shelf offering.
Covanta concurrently offered $125 million of its common stock at $23.50 per common share. It is also seeking a $300 million revolving credit facility, a $320 million funded letter-of-credit facility and $680 million first-lien term loan facility as part of a recapitalization plan.
The convertible debentures are non-callable for the first five years and may be put in years five, 10 and 15.
There is a contingent conversion hurdle at 130% of the conversion price. There is a contingent payment trigger at 120% of the principal.
The convertibles have dividend protection and takeover protection in the form of a change-of-control put with a make-whole premium.
Covanta, a Fairfield, N.J.-based waste disposal, energy and specialty services company, plans to use the proceeds of the deals and cash on hand to buy back its outstanding notes. Covanta is concurrently tendering for $195.8 million of 8.5% senior secured notes due 2010 of MSW Energy, $224.1 million of 7.375% senior secured notes due 2010 of MSW Energy and $211.6 million of 6.26% senior notes due 2015 of subsidiary ARC Holdings.
| Issuer: | Covanta Holding Corp.
|
| Issue: | Convertible senior debentures
|
| Bookrunners: | Lehman Brothers, JP Morgan and Merrill Lynch
|
| Amount: | $325 million
|
| Greenshoe: | $48.75 million
|
| Maturity: | Feb. 1, 2027
|
| Coupon: | 1%
|
| Price: | Par
|
| Yield: | 1%
|
| Conversion premium: | 20%
|
| Conversion price: | $28.20
|
| Conversion ratio: | 35.4610
|
| Contingent conversion: | 130%
|
| Contingent payment: | 120%
|
| Net-share settlement option: | Yes
|
| Dividend protection: | Yes
|
| Takeover protection: | Change-of-control put with make-whole premium
|
| Call protection: | Non-callable before Feb. 1, 2012
|
| Puts: | Feb. 1, 2012; Feb. 1, 2017; Feb. 1, 2022
|
| Price talk: | 1%-1.5%, up 17.5%-22.5%
|
| Pricing date: | Jan. 25, after the close
|
| Settlement date: | Jan. 31
|
| Distribution: | Registered
|
| Ratings: | Moody's: B1
|
| Standard & Poor's: B
|
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