Superior Energy to price $350 million 20-year exchangeables, talked at 1.25%-1.75%, up 32.5%-37.5%

By Kenneth Lim

Boston, Dec. 6 - Superior Energy Services Inc. plans to price on Thursday after the market closes $350 million of 20-year exchangeable senior notes, talked at a coupon of 1.25% to 1.75% and an initial exchange premium of 32.5% to 37.5%.

The notes will be offered at par. They will be issued by Superior Energy subsidiary SESI LLC and exchangeable into shares of Superior Energy common stock. The listed company will also guarantee the exchangeables.

There is an over-allotment option for a further $50 million.

Bear Stearns and Lehman Brothers are the bookrunners of the Rule 144A offering.

The notes will be non-callable for the first three years. They may be called in years four and five, subject to a hurdle at 175% of the exchange price, and are freely callable after that. The notes may be put in years five, 10 and 15.

There will be a contingent exchange hurdle at 135% of the exchange price.

The notes will have full dividend and takeover protection.

There will be a net-share settlement feature.

Superior Energy, a Harvey, La.-based oilfield services and equipment provider, said it will use the proceeds and some of its available cash to repurchase up to $160 million of its common stock concurrently with the offering. It will also use $233 million of the proceeds to pay the $175 million consideration of its Warrior Energy Services Corp. acquisition, to refinance its existing debt and to pay for expenses related to the acquisition.

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