Alpha Natural Resources prices $250 million of seven-year convertibles at 2.375%, up 32.5%

Boston, April 1 - Alpha Natural Resources Inc. priced $250 million of seven-year convertible senior unsecured notes on Tuesday after the market closed at a coupon of 2.375% and an initial conversion premium of 32.5%.

The deal came with the coupon at the rich end of talk of 2.375% to 2.875% and the initial conversion premium at the middle of talk of 30% to 35%.

The conversion price is $54.66 and the conversion ratio 18.2962.

A concurrent $150 million stock offering was priced at $41.25 a share. Alpha sold 3,636,363 shares.

The convertible was offered at par.

There is an over-allotment option for a further $37.5 million.

Citigroup and UBS Investment Bank are the bookrunners of the registered off-the-shelf offering.

The convertibles are non-callable and may not be put.

There is a contingent conversion trigger at 130% of the stock price. There is no contingent payment.

The convertibles have standard dividend and takeover protection.

There is a net-share settlement feature.

The concurrent stock offering has a $22.5 million greenshoe.

Alpha Natural Resources, an Abingdon, Va.-based processor of steam and metallurgical coal, said it will use the proceeds of both offerings to buy back up to $175 million outstanding principal amount of its subsidiaries' 10% senior notes due 2012 and for other general purposes.

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