By Rebecca Melvin
New York, Sept. 16 - American Equity Investment Life Holding Co. priced $170 million of five-year convertibles after the close of markets on Thursday to yield 3.5%, with an initial conversion premium of 25%, according to a release.
There is a greenshoe for $30 million. Initially, the Rule 144A offering was talked at a deal base size of $150 million and a $50 million greenshoe.
J.P. Morgan Securities LLC was bookrunner for the deal that came at the midpoint of price talk, which was for a coupon of 3.25% to 3.75% and an initial conversion premium of 22.5% to 27.5%.
In connection with the offering, American Equity entered into convertible note hedge and warrant transactions. The warrant transactions raise the effective conversion premium from the issuer's perspective to 60%.
American Equity intends to use a portion of the proceeds to pay for the convertible note hedge transactions, with the balance of proceeds earmarked to repay outstanding amounts of principal and interest under its credit facility, to repurchase outstanding convertible notes and for general corporate purposes.
American Equity is a West Des Moines, Iowa-based underwriter of annuities and life insurance products.
| Issuer: | American Equity Investment Life Holding Co.
|
| Issue: | Convertible senior notes
|
| Amount: | $170 million
|
| Greenshoe: | $30 million
|
| Maturity: | Sept. 15, 2015
|
| Coupon: | 3.5%
|
| Price: | Par
|
| Yield: | 3.5%
|
| Conversion price: | $12.50
|
| Conversion premium: | 25%
|
| Conversion ratio: | 80 shares
|
| Calls: | Non-callable for life
|
| Price talk: | 3.25%-3.75%, up 22.5%-27.5%
|
| Pricing date: | Sept. 16
|
| Settlement date: | Sept. 22
|
| Stock symbol: | NYSE: AEL
|
| Stock reference price: | $10.00
|
| Market capitalization: | $585.4 million
|
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