Time Warner Telecom $200 million 20-year convertibles talked at 2.125%-2.625%, up 25%-30%

By Kenneth Lim

Boston, March 17 - Time Warner Telecom Inc. plans to offer $200 million of 20-year convertible bonds talked to have a coupon between 2.125% and 2.625%, with an initial conversion premium between 25% and 30%, market sources confirmed.

Morgan Stanley, Wachovia Securities and Deutsche Bank are the bookrunners for the registered deal.

There is a greenshoe option of $30 million.

Final pricing is expected on March 23 after the close.

The convertibles, which mature on April 1, 2026, will be non-callable for seven years with puts in years seven, 10 and 15. There is no contingent conversion or contingent payment feature.

The company may settle conversion of the bonds in any combination of stock and cash.

There is full dividend protection in the form of a conversion ratio adjustment. Takeover protection is in the form of a change-of-control put and a premium make-whole feature.

Time Warner Telecom, a Littleton, Colo.-based IT services company that manages data and voice networks, said the proceeds of the deal will be used to call for redemption a portion of its 10.125% senior notes due 2011.

Also on Friday, Time Warner Telecom's major shareholders Time Warner Inc. and Advance/Newhouse said they would sell 17.5 million Time Warner Telecom shares in a public offering, with an over-allotment option of a further 2.6 million shares. Those shares represent about 17.2% of Time Warner Telecom's share capital. Deutsche Bank, Morgan Stanley and JP Morgan are the bookrunners for the stock offering.

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