Vector Group to price $85 million of 20-year convertibles, talked to yield 5.5% to 6%, up 29% to 33%

By Rebecca Melvin

Princeton, N.J., June 27 - Vector Group Ltd. was expected to price $85 million of 20-year convertible bonds late Tuesday, according to market sources.

The overnight deal, via bookrunner Jefferies & Co. Inc., was talked to yield 3.75% to 4.25% plus an additional amount equal to the cash dividends per share paid on Vector's stock during the prior three-month period multiplied by the total number of shares into which the debentures are convertible. The interest payment has a floor to be set in the range of 5.5% to 6%, according to a syndicate source.

Talk for the initial conversion premium was 29% to 33%. Final pricing wasn't available by press time.

There is a greenshoe of $25 million.

The bonds are non-callable for six years, and have puts in years six, 10 and 15.

Vector plans to use proceeds to call its 6.25% convertibles due July 15, 2008, of which there is $63.1 million principal outstanding, and for general corporate purposes.

Miami-based Vector (NYSE: VGR) is a tobacco holding company.

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