Allegheny Technologies talks $250 million five-year convertibles to yield 3%-3.5%, up 40%-45%

By Abigail W. Adams

Portland, Me., June 17 – Allegheny Technologies Inc. plans to price $250 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 3% to 3.5% and an initial conversion premium of 40% to 45%, according to a market source.

J.P. Morgan Securities LLC (lead left), Citigroup Global Markets Inc. and Wells Fargo Securities LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $37.5 million.

The notes are non-callable for three-years and then subject to a 130% hurdle.

There is standard takeover and dividend protection.

The notes will be settled in cash, shares or a combination of both at the company’s option.

In connection with the offering, the company will enter into capped call transactions.

Proceeds will be used to cover the cost of the call spread and to repurchase a portion of the company’s 4.75% convertible notes due 2022.

Remaining proceeds will be used for general corporate purposes.

Allegheny Technologies is a Pittsburgh-based specialty metals company.

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