School Specialty to price $125 million 20-year convertibles Thursday talked at 3.5%-4%, up 30%-37%

By Kenneth Lim

Boston, Nov. 15 - School Specialty Inc. plans to price Thursday after the market closes $125 million of 20-year convertible subordinated debentures talked at a coupon of 3.5% to 4% and an initial conversion premium of 30% to 37%.

The debentures will be offered at par.

There is an over-allotment option for a further $25 million.

Banc of America Securities LLC is the bookrunner for the Rule 144A offering.

The convertibles will be non-callable for the first five years and may be put in years five, 10 and 15.

There is a contingent conversion hurdle at 130% of the conversion price, and there is contingent payment at 120% of the principal.

There is dividend and takeover protection.

School Specialty, a Greenville, Wis.-based supplier of education products and equipment, said it will use the proceeds of the deal to concurrently buy back up to $40 million of its common stock and to pay back part of its existing bank debt.

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