PPL unit launches $300 million convert at 2.5-3.0% yield, up 27.5-32.5%

By Ronda Fears

Nashville, May 14 - PPL Energy Supply LLC launched $300 million of convertible senior notes, which convert into parent PPL Corp. and are guaranteed by PPL, to yield 2.5 to 3.0% with a 27.5% to 32.5% initial conversion premium.

Merrill Lynch & Co., Morgan Stanley and Wachovia Securities, Inc. are joint lead managers of the Rule 144A deal, which is set to price after the close Thursday.

Deutsche Bank Securities Inc. analysts put the deal, at the midpoint of talk, 1.3% rich, using a credit spread of 150 basis points over Libor and a 20% stock volatility.

The issue will be noncallable for five years, with puts in years 5,10 and 15.

There is a 120% contingent conversion trigger for life.

It is expected to be rated Baa2 by Moody's Investors Service and BBB by Standard & Poor's Corp.

There is a $45 million greenshoe available.

Also Wednesday, PPL Corp. said it plans to sell 6.5 million shares that would fetch another $242 million, based on the closing price of $37.17 closing, with a greenshoe for another 975,000 shares, via Morgan Stanley, Citigroup and JPMorgan.

PPL Corp. said it would distribute the proceeds to PPL Energy Supply, augmenting the proceeds from the convertible, to be used to repurchase its commercial paper, and general corporate purposes.

PPL shares closed off 2c, or 0.05%, to $37.17.

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