Tyson Foods to sell $1.5 billion tangible equity units; proceeds for Hillshire merger

By Stephanie N. Rotondo

Phoenix, July 28 – Tyson Foods Inc. is selling $1.5 billion of tangible equity units, the company said in a prospectus filed with the Securities and Exchange Commission on Monday.

The units will be comprised on a prepaid stock purchase contract and a senior amortizing note.

Morgan Stanley & Co. LLC, RBC Capital Markets and J.P. Morgan Securities LLC are the joint bookrunning managers.

Unless settled earlier, the prepaid stock purchase contract will settle on July 15, 2017. If the applicable market value is equal or greater to a threshold appreciation price of $50.00, holders will receive the minimum settlement rate. If the market value is greater than the reference price but less than $50.00, holders will get an amount of stock equal to $50.00 divided by the market value.

And, if the market value is less or equal to the reference price, holders will receive the maximum settlement rate of shares.

No fractional shares will be issued. Instead, holders will receive cash payments in lieu of fractional shares.

The company can redeem the stock contract early in the event of a fundamental change or at the company’s choice at the maximum settlement rate, unless the stock’s closing price exceeds 140% of the threshold appreciation price.

In such an instance, the settlement rate would be the minimum settlement rate.

There is also a call feature allowing the company to redeem the contract should its merger with Hillshire Brands be terminated.

As for the senior amortizing note, the company will make ash payments on interest and principal on the 15th day of January, April, July and October, begging Oct. 15 and ending July 15, 2017.

The units can be separated into the purchase contract and the note.

Tyson has applied to list the units on the New York Stock Exchange under the ticker symbol “TSNU.”

Proceeds will be used together with cash on hand to finance the company’s merger with Hillshire Brands and for fees and expenses related to the merger.

Tyson Foods is Springdale, Ark.-based meat production company.

© 2015 Prospect News.
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