By Rebecca Melvin
New York, Oct. 18 - Walter Investment Management Corp. priced $265 million of seven-year convertible senior subordinated notes on Thursday at par to yield 4.5% with an initial conversion premium of 40%, according to a term sheet.
Pricing of the registered, off-the-shelf deal came at the cheap end of talk, which was for a 4.5% to 5% yield and 35% to 40% initial conversion premium.
Walter also priced an upsized secondary stock offering of 6 million shares at $42.00 per share, or $252 million. There is also an over-allotment option of up to an additional 900,000 shares. Initially, the stock offering was talked at 4.5 million shares, with a greenshoe of up to an additional 675,000 shares.
The convertible bond issue has a $25 million greenshoe.
Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, Bank of America Merrill Lynch and Barclays were joint the bookrunners for the note offering. RBS Securities Inc. was a co-manager.
The convertibles are non-callable for life with no puts. They are not convertible prior to May 1, 2019 except for certain circumstances, and they will settle in cash, stock or a combination at the issuer's option.
Proceeds from the convertible notes will be used to repay the company's second-lien senior secured term loan and fees, expenses and premiums associated with it.
About $95 million of the proceeds from the common stock offering will be used to fund partially an acquisition of the outstanding capital stock of Reverse Mortgage Solutions Inc. Remaining proceeds will be used to enhance liquidity and growth and be used for working capital and general corporate purposes.
Walter is a Tampa. Fla.-based asset manager and mortgage services and portfolio owner.
| Issuer: | Walter Investment Management Corp.
|
| Issue: | Convertible senior subordinated notes
|
| Amount: | $265 million
|
| Greenshoe: | $25 million
|
| Maturity: | Nov. 1, 2019
|
| Concurrent offering: | $252 million of common stock, or 6 million shares, at $42.00 per share, upsized from 4.5 million
|
| Bookrunners: | Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, Bank of America Merrill Lynch, Barclays
|
| Co-manager: | RBS Securities Inc.
|
| Coupon: | 4.5%
|
| Price: | Par of $1000
|
| Yield: | 4.5%
|
| Conversion premium: | 40%
|
| Conversion price: | $58.80
|
| Conversion ratio: | 17.0068 common shares
|
| Call: | Non-callable
|
| Puts: | No puts
|
| Net share settlement: | Yes
|
| Takeover protection: | Yes
|
| Price talk: | 4.5%-5%, up 35%-40%
|
| Pricing date: | Oct. 17
|
| Settlement date: | Oct. 23
|
| Stock symbol: | NYSE: WAC
|
| Stock reference price: | $42.00
|
| Stock price: | $42.65, at close Oct. 17
|
| Distribution: | Registered, off the shelf
|
| Market capitalization: | $1.23 billion
|
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