By Susanna Moon
Chicago, Feb. 5 – Layne Christensen Co. said it priced about $100 million principal amount of 8% senior secured second-lien convertible notes due May 1, 2019 to be issued in exchange for its 4.25% convertible senior notes due 2018 as well as for cash.
Holders of the 4.25% convertibles have agreed to exchange $55.5 million of their notes for about $49.9 million of the notes and to purchase about $49.9 million aggregate principal amount of additional notes for cash, according to a company press release.
Cash proceeds from the transaction will be used to repay the company’s asset-based credit agreement and for general corporate purposes.
The notes will mature on May 1, 2019. However, if any of the existing 4.25% convertibles remain outstanding on Aug. 15, 2018 and the company has not extended their maturity to later than Oct. 15, 2019 then the new convertibles will mature on Aug. 15, 2018, according to a company press release.
The notes are callable at par for two periods from Feb. 15, 2018 to Aug. 14, 2018 and then again from Nov. 1, 2018 to April 30, 2019.
The notes also are callable if the company’s common stock equals or exceeds 140% of the conversion price of the notes for a specified time period.
The notes will be putable at par upon the occurrence of a fundamental change.
The notes will be convertible into shares of the company’s common stock until the close of business on the scheduled trading day immediately preceding the maturity date.
The conversion rate for the notes will initially be 76.9231 shares of common stock per $1,000 principal amount, or an initial conversion price of about $13.00 per share.
The initial conversion price of the notes represents a premium of about 55.5% to the $8.36 per share sale price of the company’s common stock on Feb. 4.
Jefferies was the placement agent.
“By further enhancing our liquidity, we view this notes offering as part of our ongoing strategic restructuring efforts and long-term growth initiatives,” Michael J. Caliel, president and chief executive officer, said in the press release.
“With growing backlog in certain segments, we believe Layne faces attractive investment opportunities. We expect our enhanced liquidity position to enable us to take advantage of strategic opportunities where we are experiencing increased customer demand for our services, including in our Inliner and Water Resources segments. Additionally, we expect our liquidity position to further strengthen as a result of our previously disclosed strategy of non-core asset sales.”
Layne Christensen is a water management, construction and drilling company based in the Woodlands, Texas.
New notes
| Issuer: | Layne Christensen Co.
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| Issue: | Convertible senior notes
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| Amount: | $100 million
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| Maturity: | May 1, 2019
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| Coupon: | 8%
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| Conversion premium: | 55.5%
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| Conversion price: | $13.00
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| Conversion ratio: | 76.9231 shares per $1,000 principal amount
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| Call option: | From Feb. 15, 2018 to Aug. 14, 2018 and then again from Nov. 1, 2018 to April 30, 2019; also if the company's common stock equals or exceeds 140% of the conversion price of the notes for a specified time period
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| Put option: | At par upon the occurrence of a fundamental change
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| Bookrunner: | Jefferies
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| Pricing date: | Feb. 5
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| Stock symbol: | Nasdaq: LAYN
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| Stock reference price: | $8.36, at close Feb. 4
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| Market capitalization: | $151.04 million
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