By Ronda Fears
Nashville, March 5 - Watson Pharmaceuticals Inc. sold an upsized $500 million of 20-year convertibles at par to yield 1.75% with a 42% initial conversion premium in the Rule 144A market via joint lead managers Lehman Brothers and Morgan Stanley.
The deal was upsized from $450 million. It sold at the rich end of both yield and premium guidance which had put the yield at 1.75% to 2.25% and the conversion premium at 38% to 42%.
Watson, which develops and markets both branded and generic drugs, plans to use the proceeds to retire outstanding debt under its existing credit facility and the remainder for general corporate purposes.
On Tuesday, Watson announced that it has obtained commitment letters from a syndicate of lenders for a $300 million, five-year senior unsecured revolving credit facility, which it expects to be available for general corporate purposes.
Terms of the convertible deal are:
| Issuer: | Watson Pharmaceuticals Inc. l
|
| Issue: | Convertible senior notes
|
| Joint lead managers: | Lehman Brothers and Morgan Stanley
|
| Amount: | $500 million, upped from $450 million
|
| Greenshoe: | $75 million, upped from $67.5 million
|
| Maturity: | March 15, 2023
|
| Coupon: | 1.75%
|
| Price: | Par
|
| Yield: | 1.75%
|
| Conversion premium: | 42%
|
| Conversion price: | $40.05
|
| Conversion ratio: | 24.969
|
| Call: | Non-callable for five years
|
| Put: | At par in years 7, 12 and 15
|
| Contingent conversion: | 125% trigger
|
| Contingent payment: | 120% trigger
|
| Expected ratings: | Moody's: Ba1 |
|
| S&P: BBB-
|
| Fitch: BBB-
|
| Settlement: | March 8
|
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