Penn Virginia prices upsized $200 million convertible notes at 4.5%, up 40%

New York, Nov. 29 - Penn Virginia Corp. priced an upsized $200 million offering of convertible senior subordinated notes due Nov. 15, 2012 after the market close Thursday, selling them with a yield of 4.5% and a 40% initial conversion premium.

The deal was increased from $150 million and came at the rich end of talk, which had put the coupon at 4.5% to 5% and the conversion premium at 35% to 40%.

JPMorgan, Lehman Brothers and Wachovia Securities are joint bookrunners of the registered transaction.

There is a $30 million over-allotment option, raised from $22.5 million.

The conversion price is $57.75 and the conversion ratio 17.3160.

There is contingent conversion subject to a 130% hurdle. The notes carry takeover and dividend protections and have net share settlement.

Penn Virginia entered into convertible note hedge and warrant transactions intended to reduce potential stock dilution upon conversion of the notes. Those effectively raise the conversion price to $74.25, or an 80% premium, from the company's perspective.

Meanwhile, Penn Virginia simultaneously sold an upsized 3 million share offering of common stock, increased from 2.2 million shares. The shares priced at $41.25 each.

There is a 450,000 share greenshoe on the common stock offering, increased from 330,000.

Penn Virginia is a Radnor, Pa.-based oil and gas driller operating onshore in the continental United States.

Penn Virginia plans to use the proceeds of the convertible notes to pay down debt from its existing revolving credit facility and to pay for the convertible note hedge transactions. The proceeds on the common stock offering will go toward paying down debt on the revolving credit facility and for general corporate purposes.

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