By Rebecca Melvin
New York, Nov. 15 - Vector Group Ltd. priced an upsized $200 million of six-year variable interest rate convertible bonds at par early Thursday to yield a fixed rate of 2.5% and an initial conversion premium of 25%, according to a prospectus.
The registered, overnight deal was originally talked at $150 million in size. Pricing came at the rich end of talk, which was for a 2.5% to 3% fixed yield and a 22.5% to 25% premium.
The bonds have a fixed yield and a dividend pass through, which taken together will create total interest of at least 7.5%.
There is a $30 million over-allotment option, which was upsized from $22.5 million.
The bookrunner of the convertibles, Jefferies & Co. Inc., also borrowed shares from Vector and allocated about half of the borrow, or about 3 million shares, to a secondary offering at $14.80 per share.
The borrowed stock is part of a share lending agreement that is also being used to facilitate hedging transactions.
The convertibles are non-callable and have takeover and dividend protection.
Vector plans to use proceeds for general corporate purposes, including in its existing tobacco business and in additional investments in real estate through its subsidiary New Valley LLC. A portion of proceeds may also be used for upcoming debt maturities.
Miami-based Vector is a tobacco holding company.
| Issuer: | Vector Group Ltd.
|
| Issue: | Convertible senior notes
|
| Amount: | $200 million, upsized from $150 million
|
| Greenshoe: | $30 million, upsized from $22.5 million
|
| Maturity: | Jan. 15, 2019
|
| Bookrunner: | Jefferies & Co. Inc.
|
| Yield: | 2.5%
|
| Conversion premium: | 25%
|
| Conversion price: | $18.50
|
| Conversion ratio: | 54.0541 shares
|
| Call: | Non-callable
|
| Put: | No
|
| Price talk: | 2.5%-3%, up 22.5%-25%
|
| Pricing date: | Nov. 15, ahead of the open
|
| Settlement date: | Nov. 20
|
| Stock symbol: | NYSE: VGR
|
| Stock price: | $15.20, at close Nov. 14
|
| Stock reference price: | $14.80
|
| Market capitalization: | $1.27 billion
|
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