Halliburton $1 billion convertibles talked to yield 2.625-3.125%, up 65-70%

By Ronda Fears

Nashville, June 23 - Halliburton Co. launched $1 billion of 20-year convertibles talked to yield 2.625% to 3.125% with a 65% to 70% initial conversion premium.

Citigroup, Goldman Sachs & Co. and JPMorgan are joint bookrunning lead managers of the Rule 144A deal, which is scheduled to price after the close Tuesday.

The senior notes will be non-callable for five years with puts in years five, 10 and 15, in cash only. There also is a 120% contingent conversion trigger.

The Houston-based oilfield services company did not specify the use of proceeds.

Halliburton shares closed off 59c, or 2.55%, to $22.57.

On Friday, the company cut its second quarter EPS forecast to 2c, citing mounting costs for an offshore drilling project in Brazil and a rise in asbestos claims. Previously, the company projected 23c, and First Call analysts were expecting 25c.

Halliburton said it will take additional operating losses on its Barracuda-Caratinga project of about $104 million, or 24c per share, after taxes.

But the company said it has inked a non-binding agreement for the project that would resolve a number of disputed issues, including some $425 million in disputed claims, subject to lender approval and final agreement.

In addition, the scheduled completion of the project would be extended to mid 2005, which Halliburton said significantly reduces the amount of potential liquidated damages. The project is now estimated at about 75% complete.

Regarding asbestos claims, Halliburton said that due to an increase in the estimated number of claims, the cash required to fund settlements may modestly exceed the previously announced $2.8 billion.

Halliburton is scheduled to report second quarter results before the market opens July 31.

Standard & Poor's Corp. said on Friday that Halliburton's ratings, including senior debt at BBB, remain on negative watch following the company's announcement.

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