Lazard $250 million mandatory talked with 6.25%-6.75% dividend, up 20%-24%

By Ronda Fears

Nashville, April 21 - French investment banking house Lazard Ltd., the privately held partnership run by Bruce Wasserstein, launched its $250 million mandatory that is pricing alongside its initial public offering. Indicative terms for the convertible are for a 6.25% to 6.75% dividend and 20% to 24% initial conversion premium.

The three-year issue would be non-callable.

Pricing for the deal is scheduled for May 5 after the market closes.

Also in addition to the IPO, estimated in a range of $25 to $27 a share for total gross proceeds of around $250 million, Lazard is issuing a $150 million exchangeable with terms expected to mirror the mandatory and $50 million of common stock to French bank Ixis.

Goldman Sachs & Co. Inc. is sole bookrunner of the mandatory. Co-managers are Citigroup, Lazard, Merrill Lynch, Morgan Stanley, Credit Suisse First Boston and JPMorgan.

There is a $37.5 million greenshoe available on the convertible offering.

Wasserstein plans to use proceeds of the Lazard offering to buy out the 36% stake in the firm owned by Lazard chairman Michel David-Weill and his allies, including the French investment firm Eurazeo SA. David-Weill in October demanded that Wasserstein pay him and allies $1.62 billion in cash for their controlling stake. Wasserstein must complete the IPO by the end of 2005 or resign.

From the beginning of the Lazard IPO buzz, there had been market chatter that a convertible was going to be part of the going-public process, but in mid-December that speculation was dashed when the first registration of the IPO was without any mention of a convertible. Rumors abroad and in the United States had put the convertible size starting in the neighborhood of $250 million to $400 million and ranging to as much as $700 million.

In financials filed with the convertible registration at the Securities and Exchange Commission, Lazard said net income to members in 2004 was $247 million, off from $250.4 million in 2003. Operating income for 2004 was stated at $357.8 million, down from $389.4 million in 2003. Net revenues in 2004 were recorded at $1.3 billion, up from $1.18 billion in 2003.

Lazard also said it reached accords with most of its Italian partners to support the IPO, led by Gerardo Braggiotti, who had been the sole holdout among the working partners.

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