Nash Finch $150 million discount cash-to-zero convertible talked to yield 2.75%-3.25%, up 32.5%-37.5%

By Ronda Fears

Nashville, March 4 - Nash Finch Co. launched $150 million in proceeds of 30-year discount cash-to-zero contingent convertible notes Friday with price talk putting the yield at 2.75% to 3.25% and initial conversion premium between 32.5% and 37.5%. The issue will pay a cash coupon for eight years.

Merrill Lynch & Co. is bookrunner of the Rule 144A deal, which is slated to price after the market close Wednesday.

At the middle of yield talk, the issue would price at 51.939 and pay a 1.5582% coupon on the face amount for eight years.

The senior subordinated notes will be non-callable for eight years, with puts in years eight, 10, 15, 20 and 25. There is a 130% contingent conversion trigger and 130% contingent payment trigger.

Full dividend and takeover protection are provided.

The convertible is expected to be rated B3 by Moody's Investors Service and B- by Standard & Poor's.

There is a $15 million proceeds greenshoe available.

Minneapolis-based Nash Finch said proceeds would be used for its asset acquisition from Roundy's Inc., or alternatively to repay part of a term loan under its senior credit facility.

Last week, Nash Finch announced it was buying the wholesale food distribution divisions of Roundy's in Westville, Ind., and Lima, Ohio, plus two retail stores in Ironton and Van Wert, Ohio, for $225 million. Nash Finch estimated the acquisition, which represents about $1 billion in annual food distribution sales, would make a net contribution to operating earnings of $31 million to $33 million in the first year after the deal closes.

Earlier this week, the food distributor reported that its fiscal fourth-quarter net profit fell, due in part to payment of a call premium for early redemption of some notes and refinancing of its senior credit facility. Net earnings were $11.2 million, or 87 cents a share, for the quarter ended Jan. 1, down from $13.0 million, or $1.05 a share, a year earlier. Total sales were $920 million, off from $1.011 billion in the year-ago period, which had an extra week.

For fiscal 2004, net earnings were $14.9 million, or $1.18 per diluted share, down from $35.1 million, or $2.88 per diluted share, for fiscal 2003. Total sales were $3.9 billion versus $4.0 billion in fiscal 2003. Nash Finch said it expects to earn $3.40 to $3.55 per share in fiscal 2005, before the effect of the Roundy's assets.

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