By Rebecca Melvin
New York, April 27 - Lennar Corp. priced $250 million of 10.5-year convertible senior notes ahead of the market open Tuesday to yield 2% with an initial conversion premium of 37.5%, according to a market source.
The Rule 144A deal, which was originally expected to price after the close on Monday, priced at the cheap end of talk, which was for a coupon of 1.5% to 2% and an initial conversion premium of 37.5% to 42.5%.
The deal has a $37.5 million over-allotment option.
Lennar also offered $250 million of 6.95% senior straight notes due 2018.
Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. were the joint bookrunners of the convertibles offering, with Deutsche Bank Securities Inc. and UBS Securities acting as the co-managers.
The convertibles are non-callable until Dec. 1, 2013. There are puts on Dec. 1, 2013 and on Dec. 1, 2015.
There is contingent interest, or 50 basis points subject to a 120% threshold.
Conversion settlement can be made in stock.
About $200 million of the proceeds from the sale of the senior notes will be used to tender for Lennar's 5.125% senior notes due 2010, its 5.95% senior notes due 2011 and its 5.95% senior notes due 2013.
Remaining proceeds are for general corporate purposes, which may include repayment or repurchase of existing Lennar senior notes or other debt.
Lennar is a Miami-based homebuilder and provider of financial services.
| Issuer: | Lennar Corp.
|
| Issue: | Convertible senior notes
|
| Amount: | $250 million
|
| Greenshoe: | $37.5 million
|
| Maturity: | Dec. 1, 2020
|
| Concurrent offering: | $250 million of 6.95% senior straight notes
|
| Bookrunners: | Citigroup Global Markets Inc., J.P. Morgan Securities Inc.
|
| Co-managers: | Deutsche Bank Securities Inc., UBS Securities
|
| Coupon: | 2%
|
| Price: | Par, $1,000
|
| Yield: | 2%
|
| Conversion premium: | 37.5%
|
| Conversion price: | $27.64
|
| Conversion ratio: | 36.2837 shares
|
| Call protection: | Non-callable until Dec. 1, 2013
|
| Puts: | On Dec. 1, 2013 and Dec. 1, 2015
|
| Price talk: | 1.5%-2%, up 37.5%-42.5%
|
| Pricing date: | April 27
|
| Settlement date: | May 4
|
| Distribution: | Rule 144A
|
| Stock reference price: | $20.10
|
| Stock listing: | NYSE: LEN
|
| Market capitalization: | $3.72 billion
|
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