By Kenneth Lim
Boston, June 19 - VeriFone Holdings Inc. priced $275 million of five-year convertible senior notes at the cheap end of talk on Monday to yield 1.375% with an initial conversion premium of 20%.
The convertibles were offered at par. The deal was talked at a coupon of 0.875% to 1.375% and an initial conversion premium of 20% to 25%.
There is an over-allotment option for a further $41.25 million.
Lehman Brothers and JPMorgan were the bookrunners of the Rule 144A offering.
The convertibles are non-callable and may not be put.
There is a contingent conversion trigger at 130% of the conversion price.
The convertibles have dividend and takeover protection.
There is a net-share settlement option.
The company has entered into convertible note hedge and warrant transactions. The warrants have an initial strike price of $62.356, or a 70% premium to Monday's closing stock price, but the strike price may be reset to a 70% premium over the market price of VeriFone common stock after about six months if the new price is higher.
VeriFone currently can issue only up to 3.25 million shares of its common stock for the convertibles, which may cap the convertibles' participation in future increases in the common stock price. If VeriFone cannot get shareholder approval after a year to increase its authorized capital to satisfy the convertibles' requirements, the coupon will increase by 200 basis points. The coupon will increase by a further 25 bps per year thereafter until VeriFone can get the required approval.
VeriFone, a San Jose, Calif.-based provider of electronic payment systems, said it will use the proceeds to fund the convertible note hedge and warrant transactions and to partly repay senior secured bank debt of VeriFone Inc., VeriFone's principal operating subsidiary.
| Issuer: | VeriFone Holdings Inc.
|
| Issue: | Convertible senior notes
|
| Bookrunners: | Lehman Brothers and JPMorgan
|
| Amount: | $275 million
|
| Greenshoe: | $41.25 million
|
| Maturity: | June 15, 2012
|
| Coupon: | 1.375%
|
| Price: | Par
|
| Yield: | 1.375%
|
| Conversion premium: | 20%
|
| Conversion price: | $44.02
|
| Conversion ratio: | 22.7190
|
| Warrant initial premium: | 70%
|
| Warrant initial strike price: | $62.356
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Contingent conversion: | 130%
|
| Call protection: | Non-callable
|
| Puts: | None
|
| Pricing date: | June 18, after the close
|
| Settlement date: | June 22
|
| Distribution: | Rule 144A
|
| Guidance: | Coupon: 0.875%-1.375%
|
| Premium: 20%-25%
|
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