Yahoo! plans to price $1 billion five-year convertibles to yield 0%-0.5%, up 45%-50%

By Rebecca Melvin

New York, Nov. 19 - Yahoo! Inc. plans to price $1 billion of five-year convertible senior notes after the market close on Wednesday that were talked to yield 0% to 0.5% with an initial conversion premium of 45% to 50%, according to a syndicate source.

The Rule 144A deal has a greenshoe for up to an additional $150 million of notes.

Joint bookrunners are J.P. Morgan Securities LLC, Goldman Sachs & Co., Citigroup Global Markets Inc., BofA Merrill Lynch and Morgan Stanley & Co. LLC.

The convertible notes, which mature Dec. 1, 2018, are non-callable, and they will be convertible into cash, shares or a combination of cash and shares.

Yahoo! also announced an increase in its share buyback authorization by $5 billion.

Up to $200 million of the proceeds from the bond issue will be used to repurchase shares of common stock from purchasers of the notes. A portion of the proceeds will also be used to pay for convertible note hedge transactions, which Yahoo! plans to enter into with initial purchasers of the bonds, with the aim of reducing potential dilution upon conversion of the notes.

Remaining proceeds will be used for general corporate purposes, which may include acquisitions and other strategic transactions, additional stock purchases and working capital. Yahoo! may also invest remaining proceeds into short- and long-term marketable securities.

Sunnyvale, Calif.-based Yahoo! is an internet search, content and communications company.

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