Anixter $125 million (proceeds) convert talked to yield 3.0-3.5%, up 26-31%

By Ronda Fears

Nashville, June 30 - Anixter International Inc. launched $125 million in proceeds of 30-year zero-coupon convertibles talked to yield 3.0% to 3.5% with a 26% to 31% initial conversion premium.

Merrill Lynch is lead manager of the deal, which is slated to price in the overnight Rule 144A market.

At the middle of price talk, the issue price would be 38.015. At that spot, the face amount would be $328 million. There is a greenshoe available for $18.75 million in proceeds, or $49.3 million at an issue price of 38.0126.

The senior notes will be noncallable for eight years with puts in years four, six, eight, 10, 15, 20 and 25.

There is a 120% contingent conversion trigger and a 120% contingent payment trigger.

Anixter expects to use the proceeds of the offering to fund possible repurchases of outstanding debt and stock, including the repurchase of up to $17 million of its stock simultaneous with the offering, and for general corporate purposes.

S&P assigned a BB+ rating to the new convertible, and affirmed the ratings of Anixter's existing debt, with a negative outlook.

Despite weak industry conditions, S&P noted that Anixter has effectively managed its cost structure and working capital levels, resulting in positive free operating cash flow and debt reductions.

Anixter stock closed Monday up 55c, or 2.4%, to $23.43. The Anixter 0% due 2020 was quoted up 0.25 point to 32.5 bid, 33 offered.

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