Apria Healthcare $200 million convertible revised talk at 3.0-3.5%, up 32-35%

By Ronda Fears

Nashville, Aug. 14 - Apria Healthcare Group Inc. spent the day marketing a $200 million convertible note, sweetening guidance during the process by boosting the coupon 25-75 basis points and adding 3-5% of premium.

The 30-year notes, set to price after the close, were first talked to yiled 2.75% to 3.25% with a 35% to 40% initial conversion premium.

Then, about midday the guidance was revised to a 3.0% to 3.5% coupon, up 32% to 35%.

The issue will have a 130% contingent conversion threshold and 120% contingetn payment trigger.

Sellside analysts were not overly impressed with the widened terms, and buyside traders reported hearing no major gray market activity in the issue.

At the midpoint of revised talk, one shop that asked to remain anonymous put the new Apria convert about 0.5% rich, using a credit spread of 350 bps over Libor and a 22% stock volatility.

At the midpoint of original guidance, Merrill Lynch had put it 1.5% cheap, using a credit spread of 375 bps over Treasuries and a 22% stock volatility.

Banc of America, JPMorgan and Morgan Stanley are joint lead managers of the deal.

Co-managers are Lyon, Fleet, Scotia Capital Markets and UBS Investment Bank.

The 30-year senior notes will be noncallable for seven years. There will be puts in years five, seven, 10, 15, 20 and 25.

There is a $50 million greenshoe available.

The company said it will use up to $100 million of proceeds to buyback stock. Remaining proceeds will be used for general corporate purposes, including perhaps additional stock repurchases and acquisitions within the next 12 months.

Apria shares ended Thursday up 57c, or 2.21%, to $26.41.

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