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A. Schulman’s $110 million offering of convertible special stock talked at 6.5%-7%, up 20%-25%
By Rebecca Melvin
New York, April 28 – A. Schulman, Inc.’s $110 million offering of cumulative perpetual convertible special stock was talked at a 6.5% to 7% dividend and a 20% to 25% initial conversion premium, according to a market source.
The registered deal is being sold via bookrunners J.P. Morgan Securities LLC and BofA Merrill Lynch, with co-managers Commerz Markets LLC, BBVA Securities Inc., Citigroup Global Markets Inc. and RBS Securities Inc.
Final terms were seen being fixed after the market close on Tuesday.
The special stock is non-callable for five years and then provisionally callable if the common stock exceeds 150% of the conversion price.
As previously reported, there is a greenshoe for a further $15 million of special stock.
Proceeds from the sale will be used to help fund the $800 million acquisition of HGGC Citadel Plastics Holdings, Inc.
If the acquisition is not completed, proceeds will be used for general corporate purposes.
A. Schulman will be able to force conversion of the special stock after May 1, 2020 subject to a 150% stock-price hurdle.
The special stock will rank senior to the company’s common stock and all future capital stock not specifically identified as ranking senior to or having parity with the special stock. The special stock will rank junior to any future capital stock identified as having seniority and will also be junior to all existing and future debt, including that of A. Schulman’s subsidiaries.
Voting rights will only be granted to special stock holders if the dividend is in arrears for six or more quarterly periods. Should that happen, special stock holders will be able to vote on an as-converted basis with holders of the company’s common stock.
No stock with a more senior ranking can be issued without approval of holders of 66 2/3% of holders of the special stock.
A. Schulman is an Akron, Ohio-based supplier of high-performance plastic compounds, powders and resins.
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