By Rebecca Melvin
Princeton, N.J., Nov. 17 - The Pantry Inc. priced $135 million seven-year convertibles at par to yield 3% with an initial conversion premium of 27.5%, a syndicate source said.
The Rule 144A deal via bookrunner Merrill Lynch & Co. priced at the cheap end of talk, which was 2.5% to 3% for the coupon and 27.5% to 32.5% for the initial conversion premium.
The deal amount was $5 million more than the $130 million issue price previously announced. The final greenshoe was $15 million, which was $5 million less than an additional $20 million originally expected.
The bonds are non-callable for the seven years and have contingent conversion at a 120% trigger. It is also a net share settled deal.
Proceeds were expected to be used to pay down existing senior debt and for general corporate purposes, including acquisitions. Additionally, the company intends to use a portion of proceeds for a convertible bond hedge and separate warrant transactions in connection with the notes.
The seven-year hedge and warrant transactions effectively increase the conversion premium associated with the convertible notes during the term of these transactions to about 60% from 27.5% from the company's perspective.
Sanford, N.C.-based The Pantry operates a chain of convenience stores in the southeastern United States.
| Issuer: | The Pantry Inc.
|
| Issue: | Senior subordinated convertible notes
|
| Bookrunner: | Merrill Lynch & Co.
|
| Amount: | $135 million
|
| Greenshoe: | $15 million
|
| Maturity: | Nov. 15, 2012
|
| Coupon: | 3%
|
| Price: | Par
|
| Yield: | 3%
|
| Conversion premium: | 27.5%
|
| Conversion price: | $50.09
|
| Conversion ratio: | 19.9622
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Contingent conversion: | Yes, at 120% trigger
|
| Net share settlement: | Yes
|
| Calls: | No calls
|
| Pricing date: | Nov. 16
|
| Settlement date: | Nov. 22
|
| Distribution: | Rule 144A
|
| Price talk: | 2.5%-3%, up 27.5%-32.5%
|
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