By Rebecca Melvin
New York, March 18 - Alcoa Inc. priced an upsized $500 million of five-year convertibles to yield 5.25% with an initial conversion price of 22.5%, according to a syndicate source.
The issue, which priced after the close of markets on Wednesday, was increased from $250 million.
The issue was also repriced from initial talk due to strong demand. Talk on the coupon was adjusted to 5.25% to 5.75%, down from 5.75% to 6.25%; and talk on the initial conversion premium was adjusted upward to 20%, from 15% to 20%.
The deal priced at the rich end of revised talk for the coupon and beyond the rich end for revised talk on the initial conversion premium.
Credit Suisse and Morgan Stanley were joint bookrunners of the registered offering.
Concurrently, Alcoa priced 150 million shares of common stock, which was expected to raise about $850 million of proceeds based on Alcoa's common stock close on March 13.
There was a 15% greenshoe for both issues, or $75 million for the convertibles.
The convertibles are non-callable for life, with no puts.
Proceeds are expected to be used to repay outstanding indebtedness under the company's senior unsecured 364-day revolving credit facility, with any remainder for general corporate purposes.
The offerings are part of a series of operational and financial actions the company is implementing to improve its cost structure and liquidity.
Alcoa is an aluminum company based in Pittsburgh.
| Issuer: | Alcoa Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $500 million, upsized from $250 million
|
| Greenshoe: | $75 million
|
| Maturity: | March 15, 2014
|
| Coupon: | 5.25%
|
| Price: | Par
|
| Yield: | 5.25%
|
| Conversion premium: | 22.5%
|
| Price talk: | 5.25% to 5.75%, adjusted from 5.75% to 6.25%, up 20%, adjusted from 15% to 20%
|
| Call: | Non callable
|
| Puts: | No puts
|
| Takeover protection: | Yes
|
| Dividend protection: | Yes
|
| Joint bookrunners: | Morgan Stanley and Credit Suisse
|
| Pricing date: | March 18
|
| Settlement: | March 24
|
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