By Rebecca Melvin
New York, Aug. 14 – AOL Inc. priced an upsized $330 million of five-year convertible senior notes after the market close on Wednesday at par to yield 0.75% with an initial conversion premium of 35%, according to a news release.
The Rule 144A deal was initially talked at $300 million in size. Pricing came toward the rich end of 0.625% to 1.125% coupon talk and at the midpoint of 32.5% to 37.5% premium talk.
There is a $49.5 million greenshoe, which was upsized from $45 million. Joint bookrunners were Goldman Sachs & Co. and J.P. Morgan Securities LLC.
The notes are non-callable with no puts. They have takeover and dividend protection and net share settlement.
In connection with the offering of notes, AOL entered into privately negotiated convertible note hedge and warrant transactions, or a call spread. The strike on the warrants is $84.92, which boosts the initial conversion premium from the issuer’s perspective to 100%.
About $31.8 million of the proceeds from the offering will be used to fund the net cost of the call spread, about $40 million of proceeds will fund common stock repurchases, and remaining proceeds will be used for general corporate purposes, which may include share repurchases, acquisitions, and other strategic transactions and working capital.
The stock repurchases are part of AOL’s previously announced $150 million share repurchase program.
New York-based AOL is a digital brands, products and services company.
| Issuer: | AOL Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $330 million, upsized from $300 million
|
| Greenshoe: | $49.5 million, upsized from $45 million
|
| Maturity: | Sept. 1, 2019
|
| Bookrunners: | Goldman Sachs & Co., J.P. Morgan Securities LLC
|
| Coupon: | 0.75%
|
| Price: | Par
|
| Yield: | 0.75%
|
| Conversion premium: | 35%
|
| Conversion price: | $57.32
|
| Conversion ratio: | 17.4456 shares
|
| Calls: | Non-callable
|
| Takeover protection: | Yes
|
| Dividend protection: | Yes
|
| Net share settlement: | Yes
|
| Price talk: | 0.625%-1.125%, up 32.5%-37.5%
|
| Call spread: | Yes, warrant strike price is $84.92, boosting premium from the issuer’s perspective to 100%
|
| Pricing date: | Aug. 13
|
| Settlement date: | Aug. 19
|
| Stock symbol: | NYSE: AOL
|
| Stock price: | $42.46 as of close Aug. 13
|
| Distribution: | Rule 144A
|
| Market capitalization: | $3.34 billion
|
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