Saks shops $200 million convertible with price talk of 1.75-2.25% yield, up 30-35%

By Ronda Fears

Nashville, March 17 - Saks Inc. was shopping $200 million of 20-year convertible notes Wednesday with guidance for a 1.75% to 2.25% coupon and a 30% to 35% initial conversion premium. The upscale retailer is making the offering on a call spread in order to boost the effective conversion premium and thereby limit the dilution impact.

Citigroup Global Markets is bookrunner of the Rule 144A deal, which was scheduled to price after Wednesday's close.

The senior notes will be non-callable for seven years. There is a put in year 10 at 100.25 and in year 15 at par.

There is a 120% contingent conversion trigger.

Holders will have full dividend protection by way of a conversion ratio adjustment.

A $30 million greenshoe is available.

Birmingham, Ala.-based Saks plans to use proceeds to repurchase or repay a portion of higher interest rate debt from time to time as interest rate changes provide attractive opportunities, and for general corporate purposes.

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