By Ronda Fears
Nashville, July 25 - America West Airlines Inc. sold $75 million of 20-year cash-to-zero convertibles at 34.361 to yield 7.25% with a 30% initial conversion premium via joint lead managers Citigroup and Merrill Lynch & Co. The bonds are guaranteed by parent America West Holdings Corp.
The Rule 144A deal, which sold at the cheap end of yield talk and cheaper than premium guidance, will pay a cash coupon for five years, then become a 0% accreting bond. Talk put the yield at 6.75% to 7.25% with a 37.5% to 42.5% conversion premium.
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.
Terms of the new deal are:
Issuer: America West Airlines Inc.
| Reference shares: | America West Holdings Corp.
|
| Issue: | Convertible senior notes
|
| Lead managers: | Citigroup, Merrill Lynch
|
| Amount | $75 million (proceeds), $218.3 million (face)
|
| Greenshoe: | $15 million (proceeds), $43.7 million (face)
|
| Maturity: | July 30, 2023
|
| Coupon: | 7.25%
|
| Price: | 34.361
|
| Yield: | 7.25%
|
| Conversion premium: | 30%
|
| Conversion price: | $10.725
|
| Conversion ratio: | 32.0382
|
| Call: | Non-callable for 5 years
|
| Put: | In years 5, 10 and 15
|
| Contingent conversion: | 110%
|
| Price talk: | 6.75-7.25%, up 37.5-42.5%
|
| Pricing date: | July 24, after the close
|
| Settlement: | July 30
|
| Distribution: | Rule 144A
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