US Airways launches $125 million 15-year convertibles talked to yield 6.75%-7.25%, up 25%-30%

By Rebecca Melvin

Princeton, N.J., Sept. 20 - US Airways Group Inc. is expected to price $125 million of 15-year convertible notes on Sept. 28 after the close, a syndicate source said.

Price talk for the Rule 144A deal is for a coupon of 6.75% to 7.25% and an initial conversion premium of 25% to 30%.

Merrill Lynch & Co. is the bookrunner for the deal, and Citigroup is co-manager.

There is an over-allotment option for $18.75 million.

The notes are non-callable for five years and will then be callable in years six through 10, with a provisional 115% trigger. There are puts in years five and 10.

The convertibles are being offered concurrently with an offering of up to 9.78 million common shares, for a proposed maximum total of $172.5 million, according to a filing with the Securities and Exchange Commission.

Proceeds of the convertible offering are expected to pay off an obligation to General Electric Co.

Arlington, Va.-based US Airways is planning to exit bankruptcy this month by merging with America West Holdings Corp. to form the sixth-biggest U.S. carrier.

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