Avery Dennison launches $400 million HiMEDS due 2020; talked at 7.375%-7.875%, up 26%-31%

By Evan Weinberger

New York, Nov. 14 - Avery Dennison Corp. launched $400 million in mandatory convertible equity units in the HiMEDS structure due Nov. 15, 2020 talked at a dividend of 7.375% to 7.875% and an initial conversion premium of 26% to 31%.

Citigroup and JPMorgan are bookrunners of the registered transaction. The mandatories have a $40 million greenshoe.

The deal was set to price Wednesday after the market close.

The mandatories are being issued at $50 per unit, and Avery Dennison will be issuing 8 million units. Each HiMEDS unit will initially consist of a contract to purchase Avery Dennison common stock and a 1/20 undivided beneficial ownership interest in a $1,000 principal amount senior note due November 15, 2020. Holders of the mandatories are required to purchase Avery Dennison common stock no later than Nov. 15, 2010 under the purchase contract. Avery Dennison will make quarterly cash payments to holders in connection with interest on the senior notes and contract adjustment payments on the purchase contracts.

The mandatories have call protection for life and no puts.

Avery Dennison is a Pasadena, Calif.-based label and office products producer. The company plans to use the proceeds to repay commercial paper obligations incurred in connection with its acquisition of Paxar Corp. in June.

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