AEP to sell $300 million mandatory convertibles

By Peter Heap

New York, May 31 - American Electric Power Co., Inc. will sell $300 million of three-year mandatory convertibles, according to a filing with the Securities and Exchange Commission.

The Columbus, Ohio energy company said the offering will be made up of six million equity units with a $50 par value. There is a greenshoe of a further 900,000 units or $45 million.

Each unit will consist of a stock purchase contract requiring the holder to buy AEP stock on Aug. 16, 2005 and a senior note due Aug. 16, 2007 as security for the purchase obligation.

Precise timing of the offering was not available but the deal is expected to price in mid-June.

Bookrunners are Goldman, Sachs & Co, J.P. Morgan and Salomon Smith Barney.

AEP will also be selling 16 million shares of common stock in a concurrent offering using the same bookrunners. The stock offering has a greenshoe of 2.4 million shares.

The offerings will be sold from AEP's shelf registration.

Global coordinator for the sales is Salomon.

AEP expects the equity units to be listed on the New York Stock Exchange under the symbol "AEP PrA."

The syndicate for the units also includes Banc of America Securities LLC, Credit Suisse First Boston, Lehman Brothers, Merrill Lynch & Co. and UBS Warburg along with A.G. Edwards & Sons, Inc., Danske Securities, Edward D. Jones & Co., LP, McDonald Investments Inc., TD Securities and The Williams Capital Group, LP.

AEP will use proceeds from the offerings to repay commercial paper and for general corporate purposes.

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