Navistar to price $500 million five-year convertibles talked to yield 3.25%-3.75%, up 25%-30%

By Rebecca Melvin

New York, Oct. 20 - Navistar International Corp. plans to price $500 million of five-year convertibles after the market close Thursday that were talked to yield 3.25% to 3.75% with an initial conversion premium of 25% to 30%, according to a syndicate source.

There is a greenshoe of $75 million of notes.

Navistar also plans to price $1 billion of straight notes, which will mature in 2021.

Proceeds will be used to repay in full amounts outstanding under its $1.1 billion term loan and $400 million synthetic revolver senior unsecured credit facilities, which expire in January 2012, as well for other general corporate purposes.

Also in connection with the convertible notes offering, Navistar plans to enter into convertible note hedge and warrant transactions with hedge counterparties.

The convertible notes, which are five-year bullets, are being led by J.P. Morgan Securities Inc., with Credit Suisse, Bank of America Merrill Lynch, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Goldman Sachs & Co. acting as joint bookrunners.

RBC Capital Markets Corp., Scotia Capital and UBS Investment Bank are co-managers.

Navistar is a Warrenville, Ill.-based manufacturer of commercial trucks, buses, diesel engines, military vehicles and chassis.

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