Frontier to sell $1.75 billion convertible preferreds to yield 11.125%-11.625%, up 12.5%-17.5%

By Rebecca Melvin

New York, June 2 – Frontier Communications Corp. plans to price $1.75 billion of convertible preferred stock in a registered offering talked to yield 11.125% to 11.625% with an initial conversion premium of 12.5% to 17.5%, according to market sources.

Frontier is also pricing $750 million of common stock.

Joint bookrunners are J.P. Morgan Securities LLC, BofA Merrill Lynch and Citigroup Capital Markets Inc.

Co-managers are Barclays, Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, Mizuho Securities, Deutsche Bank Securities Inc., Goldman Sachs & Co. and UBS Securities LLC.

Underwriters have an option to purchase up to an additional $175 million of the convertible preferreds and up to an additional $75 million of common stock.

Proceeds will be used to finance a portion of the cash consideration of the company’s previously announced acquisition of Verizon Communications Inc. in California, Florida and Texas.

The mandatories have takeover and dividend protection and are expected to be priced after the market close on Thursday.

Frontier Communications is a Stamford, Conn.-based wireline telecommunications provider.

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