By Abigail W. Adams
Portland, Me., March 8 – Assurant Inc. priced $250 million of $100-par series D mandatory convertible preferred stock prior to the market open Thursday with a dividend of 6.5% and an initial conversion premium of 20%, according to a FWP filing with the Securities and Exchange Commission.
Pricing came at the mid-point of talk for a dividend of 6.25% to 6.75% and an initial conversion premium of 17.5% to 22.5%.
Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Wells Fargo Securities, LLC are the joint bookrunners for the registered deal, which carries a greenshoe of $37.5 million, or 375,000 shares, in addition to the initial 2.5 million shares.
Dividends are payable quarterly as declared by the board of directors. Dividends are payable in cash, shares of common stock, or a combination of both at the company’s option, according the preliminary prospectus.
If dividends are paid in stock, the number of shares will be determined over a five-day averaging period ending on the trading day preceding the dividend date.
If the dividend payment exceeds the product of the number of shares delivered and 97% of the average price, the excess amount will be paid in cash. The first dividend, payable on June 15, is expected to be approximately $1.6792 and subsequent dividends $1.625.
The mandatory convertible preferreds mature on March 15, 2021. If prior to maturity, the company has not paid dividends, the conversion rate will be adjusted.
The initial price is $89.0869 and the threshold appreciation price is $106.9061. The floor price is initially $31.1804.
The conversion rate will be no more than 1.1225 shares and no less than 0.9354 shares depending on the market value of stock. Holders may convert their notes prior to maturity at the minimum conversion rate.
There is takeover protection. Holders who convert the preferred stock upon a fundamental change will be entitled to a fundamental change conversion rate based on the price paid for common stock and a fundamental change dividend make-whole amount.
Proceeds are expected to be $241.3 million, or $277.4 million if the greenshoe is exercised. Proceeds will be used to help fund the acquisition of TWG Holdings Ltd. and refinance its 2.5% senior notes due 2018.
The mandatory convertible preferreds are subject to redemption at the company’s option if the acquisition is not completed.
The preferreds will be listed for trade on the New York Stock Exchange under the ticker “AIZP.”
Assurant is a New York-based provider of risk management products and services.
| Issuer: | Assurant Inc.
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| Issue: | Series D mandatory convertible preferred stock
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| Amount: | $250 million, or 2.5 million shares
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| Overallotment option: $37.5 million, or 375,000 shares
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| Maturity: | March 15, 2021
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| Dividend: | 6.5%
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| Price: | Par of $100
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| Conversion premium: | 20%
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| Conversion price: | $106.9061, at maturity $106.9061 to $89.0869
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| Conversion rate: | 0.9354, at maturity 0.9354 to 1.1225
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| Call options: | Non-callable
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| Put options: | None
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| Bookrunners: | Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Wells Fargo Securities, LLC
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| Co-managers | BMO Capital Markets Corp., KeyBanc Capital Markets Inc. and U.S. Bancorp Investments, Inc.
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| Distribution: | Off shelf
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| Pricing date: | March 8
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| Settlement date: | March 12
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| Listing: | NYSE: AIZP
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| Stock symbol: | NYSE: AIZ
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| Stock reference price: | $89.0869
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| Market capitalization: | $4.79 billion
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| Talk: | 6.25% to 6.75% and an initial conversion premium of 17.5% to 22.5%
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