By Kenneth Lim
Boston, March 15 - Waste Connections Inc.'s $175 million offering of 20-year convertible senior notes with a coupon of 3.75% and an initial conversion premium of 35% was reoffered and priced cheaper than initially talked, syndicate sources confirmed.
The securities, which mature April 1, 2026, were priced at 98 Wednesday morning before the market opened, half a point below the 98.5 offered during talk.
Late in the day, Waste Connections announced bookrunners Citigroup and Banc of America have also exercised their greenshoe option of a further $25 million.
This was a Rule 144A deal.
The convertibles have an initial conversion price of $51, or a conversion ratio of about 19.608.
They are non-callable for the first four years, and have a present-value coupon make whole feature until the first put in year five, which will ensure investors receive coupon payments for the first five years. There are also puts in years 10 and 15.
There is a contingent conversion trigger of 130% of the conversion price.
The convertibles have dividend protection and the takeover protection is in the form of a premium make-whole feature.
A syndicate source said the deal was oversubscribed and saw "a good amount of fundamental investor interest."
Waste Connections is a Folsom, Calif.-based solid waste services company. It plans to use $65 million of the proceeds to buy back its own stock. The rest of the proceeds will be used to reduce its borrowings pending the potential redemption after May 7 of its floating-rate convertible bond due 2007.
| Issuer: | Waste Connections Inc.
|
| Issue: | Convertible senior unsecured notes
|
| Bookrunner: | Citigroup, Banc of America Securities
|
| Amount: | $175 million, excluding greenshoe
|
| Greenshoe: | $25 million (exercised)
|
| Maturity: | April 1, 2026
|
| Coupon: | 3.75%
|
| Price: | Par, reoffered at 98
|
| Yield: | 3.75%
|
| Conversion premium: | 35%
|
| Conversion price: | $51
|
| Conversion ratio: | 19.608
|
| Contingent conversion: | 130%
|
| Contingent payment: | None
|
| Dividend protection: | Yes
|
| Takeover protection: | Premium make-whole
|
| Call protection: | Non-callable 4 years with present-value coupon make-whole to year 5
|
| Puts: | Years 5, 10, 15
|
| Price talk: | 3.75%, up 35%, reoffered at 98.5
|
| Pricing date: | March 15, before open
|
| Settlement date: | March 20
|
| Distribution: | Rule 144A
|
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