By Rebecca Melvin
New York, April 28 – A. Schulman, Inc. priced $110 million of cumulative perpetual convertible special stock at par to yield 6% with an initial conversion premium of 25%, according to a release.
Pricing of the registered deal came beyond the rich end of 6.5% to 7% talk on the dividend and at the rich end of 20% to 25% premium talk.
J.P. Morgan Securities LLC and BofA Merrill Lynch were joint bookrunners of the deal, for which there is a $15 million greenshoe. Co-managers were Commerz Markets LLC, BBVA Securities Inc., Citigroup Global Markets Inc. and RBS Securities Inc.
A. Schulman will be able to force conversion of the special stock after May 1, 2020, subject to a 150% stock-price hurdle.
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, including debt repayment.
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.
| Issuer: | A. Schulman Inc.
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| Issue: | Convertible special stock
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| Amount: | $110 million
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| Greenshoe: | $15 million
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| Maturity: | Perpetual
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| Bookrunners: | J.P. Morgan Securities LLC and BofA Merrill Lynch
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| Co-managers: | Commerz Markets LLC, BBVA Securities Inc., Citigroup Global Markets Inc. and RBS Securities Inc.
|
| Dividend: | 6%
|
| Price: | Par, $1,000
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| Yield: | 6%
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| Conversion premium: | 25%
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| Conversion price: | $52.33
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| Conversion ratio | 19.1095 shares
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| Forced conversion: | After five years until May 1, 2020 at the company’s election if shares are 150% of the conversion price
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| Pricing date: | April 28
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| Settlement date: | May 4
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| Distribution: | Registered
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| Price talk: | 6.5%-7%, up 20%-25%
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| Stock symbol: | Nasdaq: SHLM
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| Stock reference price: | $41.86, as of close April 28
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| Market capitalization: | $1.22 billion
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