Penn Virginia plans $50 million convertible preferred shares to yield 5.5%-6%, up 20%-25%

By Rebecca Melvin

New York, Oct. 9 - Penn Virginia Corp. plans to price $50 million of convertible preferred shares at $100 per share after the market close on Thursday that were talked to yield 5.5% to 6% with an initial conversion premium of 20% to 25%, according to a market source.

The registered offering of depositary shares representing a fractional ownership of interest in a share of convertible perpetual preferred stock, or preferred equity, and will be made concurrently with an offering of 12 million shares of common stock.

The underwriters have an over-allotment option for up to $7.5 million additional preferred equity depositary shares and 1.8 million additional shares of stock.

Credit Suisse Securities (USA) LLC is acting as active bookrunner and stabilization agent, and RBC Capital Markets and Wells Fargo Securities are passive bookrunners. Co-managers are Capital One Southcoast Inc. and Scotia Bank-Howard Weill.

Proceeds will be used to repay the remaining outstanding borrowings under its revolving credit facility and for general corporate purposes.

The perpetual preferreds are non-callable with forced conversion after five years at the company's option if the stock is 30% above the conversion price.

The shares have physical conversion settlement and change-of-control and dividend protection.

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

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