New Issue: Alaska Air sells upsized $150 million convertible at 3-month Libor plus 2.5%, up 35.4%

By Ronda Fears

Nashville, March 18 - Alaska Air Group Inc. sold an upsized $150 million of 20-year convertible floaters at par to yield three-month Libor plus 250 basis points with a 35.4% initial conversion premium.

Merrill Lynch & Co. was lead manager of the drive-by deal, which was boosted from $125 million.

The Rule 144A issue pays a cash coupon for five years, then reverts to a 0% coupon. Coupon payments are collateralized for three years.

The issue sold at cheaper end of yield talk of three-month Libor plus 212.5 bps to 262.5 bps. The premium came at the cheap end of guidance of 35% to 40%, as well.

Terms of the deal are:

Issuer:	Alaska Air Group Inc.
Issue:	Convertible senior notes
Lead manager:	Merrill Lynch
Co-Manager:	Goldman Sachs
Amount:	$150 million, up from $125 million
Greenshoe:	$25 million
Maturity:	March 30, 2023
Price:	Par
Coupon:	3-month Libor plus 2.5% for five years, then 0%
Conversion premium:	35.4%
Conversion price:	$26
Conversion ratio:	38.4615
Call:	Non-callable for three years
Put:	In years five, 10 and 15
Contingent conversion:	110% trigger
Expected ratings:	Moody's: B3
	S&P: BB
Settlement:	March 21

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