America West prices $75 million convertibles to yield 7.25%, up 30%

Nashville, July 24 - America West Airlines Inc. priced $75 million of 20-year cash-to-zero convertibles to yield 7.25% with a 30% initial conversion premium.

The deal came cheaper than talk which had put the yield at 6.75% to 7.25% with a 37.5% to 42.5% initial conversion premium.

The Rule 144A deal, which priced after the close Thursday, will pay a cash coupon of 7.25% for five years, then become a 0% accreting bond.

Joint lead managers are Citigroup and Merrill Lynch & Co.

The securities convert at a price of $10.725 per share. The conversion ratio is 32.0382 shares. They were issued at $343.61.

The senior notes will be non-callable for five years with puts in years five, 10 and 15. There also is a 110% contingent conversion trigger.

There is a $15 million greenshoe available.

The company will put $42.9 million of the proceeds in a special account to collateralize principal and interest payments on some of its debt up to Sept. 30, 2004. America West said the balance of proceeds would be used for working capital and general corporate purposes.

Shares of the airline closed Thursday down $1.26, or 13.25%, to $8.25.

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