Temple-Inland launches $300 million mandatory convertibles talked at 7.5-8.0% yield, up 18-22%

By Ronda Fears

Nashville, Tenn., April 16 - Temple-Inland launched $300 million of mandatory convertibles talked to yield 7.5% to 8.0% with an 18% to 22% initial conversion premium, via lead manager Salomon Smith Barney. The deal is set to price after the close Thursday, April 25, after a full road show.

Austin, Texas-based Temple-Inland, which makes corrugated packaging and building products and also owns diversified financial services operations, has not yet specified a use for the proceeds.

The company is also selling 3.6 million shares of common stock, aiming to raise another $200 million.

Temple-Inland shares closed off 33c to $56.42.

Late Monday, Temple-Inland Inc. reported first quarter income from continuing operations of $19 million, or 38c per diluted share, excluding an after-tax special charge of $4 million and the after-tax effect of $11 million from the adoption of FASB Statement No. 142. In first quarter 2001, income from continuing operations was $12 million, or 24c per diluted share.

The company recorded net income of $4 million, or 8c per diluted share, compared with first quarter 2001 net income of $10 million, or 20c per diluted share. Total revenues came to $1.03 billion, versus $1.05 billion a year before.

"Markets remained tough in the first quarter. Economic conditions, however, appear to be improving and we anticipate our second quarter results will benefit from increased economic activity," said Temple-Inland chief executive Kenneth Jastrow in the company's earnings report.

The company's acquisition of Gaylord Container Corp. was completed on April 5 but the company acquired effective control of Gaylord and began consolidating Gaylord's results on March 1. Gaylord contributed $5 million to the paper group's segment operating income in the quarter but that was offset by a similar increase in interest expense related to financing costs from the acquisition.

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