Vitamin Shoppe greenshoe exercised, ups convertibles to $143.75 million

By Wendy Van Sickle

Columbus, Ohio, Dec. 9 – Underwriters for Vitamin Shoppe Inc.’s 2.25% five-year convertible senior notes fully exercised their over-allotment option for $18.75 million more of the convertibles, increasing the total issue size to $143.75 million, according to a press release.

As previously reported, the company sold the convertibles at par of $1,000 on Dec. 3 in a Rule 144A offering via bookrunners BofA Merrill Lynch and J.P. Morgan Securities LLC.

The convertibles’ initial conversion premium is 27.5%.

The initial conversion rate is 25.1625 shares of common stock per each $1,000 of notes, with an initial conversion price of $39.74 a share.

In connection with the pricing of the notes, Vitamin Shoppe announced plans to enter into convertible note hedge and warrant transactions, or a call spread, with Bank of America NA and JPMorgan Chase Bank NA. The call spread fixes the conversion price from the issuer’s perspective at $52.99, a 70% premium.

About $52 million of the proceeds will be used to repurchase common shares from purchasers of the convertible notes in privately negotiated transactions. Another $50 million will be used to repurchase common stock through an accelerated share repurchase program. Remaining proceeds will be used to fund the cost of convertible note hedge transactions and for fees and expenses.

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

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