Vitamin Shoppe talks $125 million five-year convertibles at 1.75%-2.25% coupon, up 32.5%-37.5%

By Rebecca Melvin

New York, Dec. 3 – The Vitamin Shoppe’s $125 million offering of five-year convertible senior notes was being talked at a 1.75% to 2.25% coupon and a 32.5% to 37.5% initial conversion premium, according to a syndicate source.

The Rule 144A deal was seen pricing after the market close on Thursday.

Price talk was not immediately available when the deal was launched late Wednesday.

As previously reported, joint bookrunners for the deal are BofA Merrill Lynch and J.P. Morgan Securities LLC.

There is a greenshoe for up to an additional $18.75 million of notes, and they will be net share settled.

In connection with the pricing of the notes, Vitamin Shoppe plans to enter into convertible note hedge and warrant transactions, or a call spread, with initial purchasers of the bonds.

Proceeds will be used to repurchase up to $50 million of common shares from purchasers of the convertible notes in privately negotiated transaction with remaining proceeds earmarked for additional share repurchase.

Also in connection with the offering, another $100 million share repurchase program has been authorized in addition to the company’s existing $200 million share repurchase program.

Secaucus, N.J.-based Vitamin Shoppe is a specialty retailer and contract manufacturer of nutritional products.

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