Southwestern Energy plans $1.3 billion convertible preferreds to yield 5.75%-6.25%, up 17.5%-22.5%

By Rebecca Melvin

New York, Jan. 12 – Southwestern Energy Co. launched a $1.3 billion offering of mandatory convertible preferred shares, or 26 million shares to be issued at $50.00, ahead of the market open on Monday for pricing expected after the market close on Wednesday, according to market sources.

The registered deal was talked at a dividend of 5.75% to 6.25% and an initial conversion premium of 17.5% to 22.5%, and it was pricing concurrently with an offering of common stock for about $500 million.

The offerings, which each have a 15% greenshoe, are not contingent upon one another.

Proceeds will be used to repay borrowings under the company’s $4.5 billion bridge term loan facility associated with its Cheasapeake acquisition.

Joint bookrunners of the series B mandatory convertibles are BofA Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Wells Fargo Securities LLC and BNP Paribas.

The series B preferreds are expected to be listed on the New York Stock Exchange under the symbol “SWNC.”

Southwestern Energy is a Houston-based oil and gas exploration and development company.

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