By Rebecca Melvin
Princeton, N.J., July 14 - Voestalpine AG priced Thursday an upsized €230 million of 1.5% convertibles with an initial conversion premium of 30%.
The five-year bonds, sold via bookrunner Deutsche Bank, were upsized from their initial €200 million, and may be further increased to €250 million if the greenshoe is exercised.
The bonds priced near the middle of coupon talk, which was 1.2% to 1.7%, and at the cheap end of talk for an initial conversion premium of between 30% and 35%.
The company said proceeds would be used for general corporate purposes. Analysis by Barclays Capital said proceeds would help fund acquisitions, with a focus on Central and Eastern Europe.
Voestalpine makes steel for the automobile, building, railway and household appliances industries.
Barclays Capital analysts valued the bonds at 98.8, compared to a stock price of €57.5. The valuation assumed a credit spread of 120 basis points over Libor and volatility of 27%. It also assumed a dividend yield of 3% and a stock borrow of 1%.
While the analysts said they saw little valuation upside in the deal at the issue price, they did expect it to be supported above the theoretical value estimate, given the slow pace of new issuance and improving sentiment in the European convertible market.
| Issuer: | Voestalpine AG
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| Issue: | Convertible bonds
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| Amount: | €230 million
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| Greenshoe: | €20 million
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| Maturity: | July 21, 2010 |
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| Coupon: | 1.5%
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| Price: | Par
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| Yield: | 1.5%
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| Conversion premium: | 30%
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| Conversion price: | €74.98
|
| Call: | January 2009
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| Bookrunner: | Deutsche Bank
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| Pricing date: | July 14
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| Settlement date: | July 21
|
| Price talk: | Yield: 1.2%-1.7%; conversion premium: 30%-35%
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