By Ronda Fears
Nashville, Oct. 29 - Valero Energy Corp. sold $211.5 million principal amount of five-year mandatory 2% convertibles at $22 with a 13% initial conversion premium, via joint lead managers Lehman Brothers and Citigroup.
The issue had been talked to price between $21 and $22 for the $25 par securities, which were originally issued to Orion Refining Corp. as part payment for Valero's acquisition of a refinery from the bankrupt company.
The 2% mandatory matures July 1, 2006, and is non-callable. The conversion price has a lower threshold of $37.37 with a 0.6690 conversion ratio, and upper threshold of $50.45 with a conversion ratio of 0.4955.
The mandatory does not have any dividend protection features.
In July, Valero, a San Antonio, Texas oil refiner, issued the mandatory to Orion as part of its purchase of the Louisiana refinery for $400 million plus $145 million for inventory and up to $175 million of earn-out payments.
Terms of the deal are:
| Issuer: | Valero Energy Corp.
|
| Issue: | Mandatory convertible preferred stock
|
| Lead manager: | Lehman Brothers and Citigroup
|
| Amount: | $211.5 million principal amount (8.46 million shares)
|
| Maturity: | July 1, 2006
|
| Dividend: | 2%
|
| Price: | $22
|
| Par: | $25
|
| Conversion premium: | 13%
|
| Conversion price: | $37.37/$50.45
|
| Conversion ratio: | 0.4955/0.6690
|
| Call: | Non-callable
|
| Price talk: | $21 to $22
|
| Pricing date: | Oct. 28, after the close
|
| Settlement | Nov. 3
|
| Distribution: | Registered
|
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