By Stephanie N. Rotondo
Seattle, Dec. 2 – Rexnord Corp. sold $350 million of 5.75% series A mandatory convertible preferred stock on Friday with an initial conversion premium of 20%, the company announced.
Initial price talk was for a yield of 5.5% to 6% with an initial conversion premium of 17.5% to 22.5%, according to a market source.
The convertible preferreds will be issued as depositary shares representing a 1/20 interest.
There is a $52.5 million over-allotment option.
Credit Suisse Securities (USA) LLC, Barclays, Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. are the joint bookrunners.
The convertibles have a liquidation preference of $1,000 per share, or $50.00 per each depositary share.
The issue will automatically convert to common stock on Nov. 15, 2019, with an initial reference price of $20.99 and a threshold appreciation price of $25.19. The conversion rate will equate to 1.9851 shares to 2.3821 shares per each depositary share.
Prior to maturity, holders of at least 20 depositary shares can cause the company to convert their holdings upon a fundamental change.
Upon a fundamental change, the conversion rate may be adjusted. Holders may also be entitled to a make-whole premium.
The preferreds are not redeemable.
Proceeds will be used to repay $169.6 million – or $195 million, if the over-allotment option is fully exercised – of an outstanding term loan. Remaining funds will be used for general corporate purposes.
Rexnord is a West Milwaukee, Wis.-based industrial company comprising two strategic platforms: Process and motion control, and water management.
| Issuer: | Rexnord Corp.
|
| Securities: | Series A mandatory convertible preferred stock
|
| Amount: | $350 million
|
| Greenshoe: | $52.5 million
|
| Maturity: | Nov. 15, 2019
|
| Bookrunners: | Credit Suisse Securities (USA) LLC, Barclays, Citigroup Global Markets Inc., Deutsche Bank Securities Inc.
|
| Co-managers: | Robert W. Baird & Co. Inc., SunTrust Robinson Humphrey Inc., Mizuho Securities USA Inc.
|
| Dividend: | 5.75%
|
| Price: | Par of $50.00
|
| Yield: | 5.75%
|
| Conversion premium: | 20%
|
| Threshold appreciation price: | $25.19
|
| Initial reference price: | $20.99 per share
|
| Conversion rate: | 1.9851 to 2.3821 shares
|
| Pricing date: | Dec. 2
|
| Settlement date: | Dec. 7
|
| Talk: | 5.5% to 65%, up 17.5% to 22.5%
|
| Stock symbol: | NYSE: RXN
|
| Stock price: | $20.99 as of Dec. 1 close
|
| Market capitalization: | $2.15 billion
|
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