RBC Bearings talks $400 million mandatory convertible preferreds to yield 5%-5.5%, up 20%-25%

By Abigail W. Adams

Portland, Me., Sept. 20 – RBC Bearings Inc. plans to price $400 million par-of-$100 three-year mandatory convertible preferred stock after the market close on Tuesday with price talk for a dividend of 5% to 5.5% and an initial conversion premium of 20% to 25%, according to a market source.

Goldman Sachs & Co. LLC, Wells Fargo Securities LLC, BofA Securities Inc., Citigroup Global Markets Inc. and Truist Securities Inc. are bookrunners for the registered offering, which carries a greenshoe of $60 million.

The company may call the convertible preferreds if the acquisition of ABB’s Dodge Mechanical Power Transmission Business is not consummated by Jan. 26, 2022.

There is takeover protection.

Concurrently, the company is pricing a secondary offering of 3 million shares of common stock, which carries a greenshoe of 450,000 shares.

In addition, Roller Bearing Co. of America Inc., a subsidiary, may also price a $500 million offering of senior notes.

Net proceeds from the mandatory convertible preferreds are expected to be $387.2 million or will be $445.4 million if the greenshoe is exercised in full.

Proceeds, together with proceeds from the concurrent offerings, will be used to fund the cash purchase price of the pending acquisition.

RBC Bearings is an Oxford, Conn.-based ball and roller bearing manufacturing company serving the industrial, aerospace and defense industries.

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