By Kenneth Lim
Boston, May 1 - Dune Energy Inc. priced an upsized $180 million of convertible perpetual senior preferred stock within talk on Tuesday to yield 10% with an initial conversion premium of 20%.
The preferreds were sold at par of $1,000 apiece. The deal was talked at a dividend rate of 9.875% to 10.125% and an initial conversion premium of 18% to 22% and was initially expected to price Wednesday.
The size of the deal was originally $140 million. There is no over-allotment option.
Jefferies & Co. was the bookrunner of the Rule 144A offering.
If the preferreds are converted before the third year, the conversion rate will be made whole for all required dividends through June 1, 2010.
If the common stock trades below the reset threshold of $2.50 at the end of the first year, the conversion price will be reset to the higher of $1.75 or 10% above the current common stock price. If the conversion price is reset to the indicated price, the dividend rate will increase by 200 basis points.
The convertibles are non-callable for the first 5.5 years. They may be put in year 5.5, but if the company does not redeem the preferreds it will lower the conversion price by 20% and increase the dividend rate by 200 bps.
The preferreds have dividend and takeover protection.
Dune Energy concurrently sold an upsized $300 million of five-year senior secured notes at par to yield 10½%.
Dune, a Houston-based oil and gas exploration company, said it will use the proceeds from both deals to acquire all of the outstanding capital stock of Goldking Energy Corp. as announced on April 18. Any remaining proceeds will be used to pay for acquisition-related expenses and for working capital.
| Issuer: | Dune Energy Inc.
|
| Issue: | Convertible perpetual senior preferred stock
|
| Bookrunner: | Jefferies & Co.
|
| Amount: | $180 million
|
| Greenshoe: | None
|
| Maturity: | Perpetual
|
| Dividend: | 10%
|
| Price: | Par
|
| Yield: | 10%
|
| Conversion premium: | 20%
|
| Conversion price: | $3
|
| Conversion ratio: | 333.3333
|
| Reset provision: | On May 1, 2008, conversion price will be reset to higher of $1.75 or 110% of common stock price if common stock trades below $2.50. If conversion price if reset to $1.75, dividend rate will increase to 12%
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Call protection: | Non-callable before Dec. 1, 2012
|
| Puts: | Dec. 1, 2012. If company does not redeem preferreds, it may reset the coupon to 12% and the conversion price to 80% of the prevailing conversion price
|
| Price talk: | 9.875%-10.125%, up 18%-22%
|
| Pricing date: | May 1
|
| Settlement date: | May 15
|
| Distribution: | Rule 144A
|
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