American Equity greenshoe exercise on 3.5% convertible notes lifts total deal size to $200 million

By Susanna Moon

Chicago, Sept. 22 - American Equity Investment Life Holding Co.'s underwriters exercised the $30 million over-allotment option for its 3.5% convertible senior notes due Sept. 15, 2015, bringing the total issue to $200 million, according to an 8-K filing with the Securities and Exchange Commission.

The company priced $170 million of the convertibles after the market close on Sept. 16 to yield 3.5%, with an initial conversion premium of 25%.

J.P. Morgan Securities LLC was the bookrunner.

As previously noted, the Rule 144A offering initially was talked at a deal base size of $150 million and a $50 million greenshoe.

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 convertibles and for general corporate purposes.

American Equity is a West Des Moines, Iowa-based underwriter of annuities and life insurance products.

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