By Sara Rosenberg
New York, May 28 - American Financial Group Inc. sold $175 million in proceeds, $471 million principal at maturity, of 30-year cash-to-zero convertibles with a cash coupon for five years, then becoming a 0% accreting bond. The deal priced at par for a yield to maturity of 4% and with a 47.5% initial conversion premium.
The deal came at the cheap end of price talk, which was for a 3.5 to 4.0% yield with an initial conversion premium of 47.5-52.5%.
Merrill Lynch & Co. and UBS Warburg are joint lead managers on the Rule 144A deal.
The bonds are non-callable for five years with puts in years 5, 10, 15, 20 and 25.
There is a $25 million proceeds greenshoe or $67.3 million principal at maturity.
There is a contingent conversion trigger of 120% for life and a contingent payment trigger of 120%.
The Cincinnati-based property and casualty insurer intends to use proceeds to repay outstanding debt under its existing bank line of credit and provide capital for operations.
The offering had been postponed from last week.
Terms of the new deal are:
| Issuer: | American Financial Group Inc.
|
| Issue: | Cash-to-zero senior convertible notes
|
| Amount: | $175 million proceeds, $471 million principal at maturity
|
| Greenshoe: | $25 million, $67.3 million principal at maturity
|
| Lead manager: | Merrill Lynch and UBS Warburg
|
| Maturity date: | June 2, 2033
|
| Coupon: | 4% of issue price, or 1.4861% of principal amount,
|
| Issue price: | 37.153
|
| Yield to maturity: | 4%
|
| Conversion premium: | 47.5%
|
| Conversion price: | $32.303
|
| Conversion ratio: | 11.5016
|
| Call: | Hard call protection for five years
|
| Put: | In years 5, 10, 15, 20 and 25
|
| Contingent conversion: | 120%
|
| Contingent payment: | 120% trigger
|
| Ratings: | Moody's: expected Baa3
|
| S&P: BBB
|
| Settlement date: | June 2, 2003
|
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