Nabors talks $250 million mandatory convertible preferreds at 5.75% to 6.5%, up 17.5% to 22.5%

By Abigail W. Adams

Portland, Me., May 9 – Nabors Industries Ltd. plans to price $250 million, or 5 million shares, of three-year $50-par series A mandatory convertible preferred shares prior to the market open on Thursday with price talk for a dividend of 5.75% to 6.5% and an initial conversion premium of 17.5% to 22.5%, according to a market source.

Morgan Stanley & Co. Inc. and Citigroup Global Markets Inc. are joint bookrunners for the registered offering, which carries a greenshoe of $37.5 million, or 750,000 shares.

The series A mandatory convertible preferreds are being priced alongside a concurrent offering of 35 million common shares. The common stock offering carries a greenshoe of 5.25 million shares.

The mandatory conversion date for the series A mandatory convertible preferred shares is expected to be May 1, 2021, according to a 424B5 filing with the Securities and Exchange Commission.

The number of shares issuable upon conversion will be determined based on the volume-weighted average share price of common stock over a 20-day period preceding the mandatory conversion date.

In addition, on the mandatory conversion date holders of the preferred shares will receive an amount equal to unpaid dividends in cash, shares, or a combination of both at the company’s option, according to the 424B5 filing.

The convertible preferred shares are non-callable. They are convertible upon a fundamental change at the fundamental change conversion rate.

Proceeds will be used to repay outstanding debt under the company’s revolving credit facility.

Nabors is a Hamilton, Bermuda-based oil, gas and geothermal drilling contractor.

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