By Rebecca Melvin
New York, May 19 - Covanta Holding Corp. priced an upsized $400 million of five-year convertible senior notes after the close Monday at par to yield 3.25% with an initial conversion premium of 22.5%, according to a syndicate source.
Initially the offering was expected to be $300 million in size.
The Rule 144A offering priced at the midpoint of talk, which 3% to 3.5% for the coupon and at 20% to 25% for the initial conversion premium.
The greenshoe was upsized to $60 million from $45 million.
Barclays Capital Inc., J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. were joint bookrunners of the five-year bullet paper.
There are no puts, and the paper will be cash settled.
Proceeds will be for working capital and general corporate purposes, which may include funding a portion of the construction cost of a 1,700 metric tonnes per day energy-from-waste facility in Dublin, Ireland, other capital expenditures, potential permitted investments or acquisitions.
In connection with the offering, Covanta entered into convertible note hedge and warrant transactions with affiliates of one or more of the initial purchasers.
Under the strike price of the warrant transactions, the effective initial conversion premium to Covanta is 170%.
The net cost to Covanta of the cash convertible note hedge transactions and the warrant transactions is $50.8 million, which will be paid with available cash in connection with the offering.
Covanta is a Fairfield, N.J.-based waste disposal, energy and specialty services company.
| Issuer: | Covanta Holding Corp.
|
| Issue: | Convertible senior notes
|
| Amount: | $400 million, upsized from $300 million
|
| Maturity: | June 1, 2014
|
| Greenshoe: | $60 million, upsized from $45 million
|
| Bookrunners: | Barclays Capital Inc., J.P. Morgan Securities Inc. and Citigroup Global Markets Inc.
|
| Coupon: | 3.25%
|
| Price: | Par
|
| Yield: | 3.25%
|
| Conversion premium: | 22.5%
|
| Conversion price: | $18.55
|
| Conversion ratio: | 53.9185 shares
|
| Price talk: | 3%-3.5%, up 22.5%
|
| Call: | Non-callable for life
|
| Puts: | No puts
|
| Pricing date: | May 18
|
| Distribution: | Rule 144A
|
| Stock symbol: | NYSE: CVA
|
| Market capitalization: | $2.33 billion
|
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