Air Transport pricing $200 million seven-year convertibles; price talk 1.25%-1.75%, up 32.5%-37.5%

By Stephanie N. Rotondo

Seattle, Sept. 25 – Air Transport Services Group Inc. intends to sell $200 million of convertible senior notes due 2024, the company said in a press release on Monday.

Price talk is for a 1.25% to 1.75% yield and an initial conversion premium of 32.5% to 37.5%, according to a market source.

Goldman Sachs & Co. and SunTrust are bookrunners with Goldman on the left. The deal will be sold under Rule 144A deal.

There is a $30 million over-allotment option.

Conversions will be settled in cash, unless the company amends its certificate of incorporation to increase the amount of authorized common shares. If such an amendment occurs, conversions will be settled in cash, common stock, or both, at the company’s option.

The notes are contingently convertible prior to April 15, 2024. After that, the issue is convertible at any time.

The convertibles become putable in certain circumstances.

In connections with the offering, Air Transport expects to enter into privately negotiated convertible note hedge transactions with one or more financial institutions. The company also anticipates entering into separate privately negotiated warrant transactions with the option counterparties.

A portion of the deal’s proceeds will be used to pay for the hedging transactions. The remaining funds will be used to repay part of the company’s outstanding borrowings under its $545 million revolving credit facility and for general corporate purposes.

Air Transport is a Wilmington, Ohio-based provider of aircraft leasing and air cargo transportation and related services to domestic and foreign air carriers and other companies that outsource their air cargo lift requirements.

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