Meritor offers $300 million 20-year convertibles at 3.25%, up 60%

By Stephanie N. Rotondo

Seattle, Sept. 18 – Meritor Inc. announced a $300 million offering of unsecured convertible senior notes due 2037 on Monday, with price talk for a 3.25% yield and an initial conversion premium of 60%.

BNP Paribas Securities Corp., BofA Merrill Lynch, J.P. Morgan Securities LLC, RBC Capital Markets LLC and PNC Capital Markets LLC are the joint bookrunners of the Rule 144A deal.

In certain circumstances, the notes will be convertible into cash. In other instances, the debt can be converted into cash, common stock, or a combination of both, at the company’s option.

The reference price will be calculated via the average of the volume weighted average price seen on Monday and Tuesday’s close.

The convertibles become callable on or after Oct. 15, 2025, according to a market source. The issue is also putable on that date.

Proceeds will be used to purchase, redeem or otherwise repay a portion of outstanding debt.

Meritor is a Troy, Mich.-based supplier of drivetrain, mobility, braking and aftermarket solutions for commercial vehicle and industrial markets.

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