By Abigail W. Adams
Portland, Me., July 26 – Turning Point Brands, Inc. priced an upsized $150 million of five-year convertible notes after the market close on Thursday at par with a coupon of 2.5% and an initial conversion premium of 30%, according to a company news release.
Pricing came at the cheap end of talk for a coupon of 2% to 2.5% and at the midpoint of talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.
Cowen Inc. is the bookrunner for the Rule 144A deal, which carries an upsized greenshoe of $22.5 million.
The initial size of the deal was $125 million with a greenshoe of $18.75 million.
The notes are non-callable until July 15, 2022 and then subject to a 130% hurdle.
There is dividend and takeover protection.
The notes will be settled in cash, shares or a combination of both at the company’s option.
In connection with the offering, the company will enter into capped call transactions with a cap price of $82.86, representing a premium of 100% over the last reported sales price of stock.
Net proceeds are expected to be $144.75 million, assuming the greenshoe is not exercised.
Proceeds will be used to cover the cost of the call spread, to repay the $35.5 million outstanding amount under its second-lien credit agreement and for general corporate purposes, which may include yet to be identified acquisitions, according to a company news release.
Turning Point Brands is a Louisville, Ky.-based provider of tobacco products and adult consumer alternatives.
| Issuer: | Turning Point Brands Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $150 million
|
| Greenshoe: | $22.5 million
|
| Maturity: | July 15, 2024
|
| Bookrunner: | Cowen Inc.
|
| Coupon: | 2.5%
|
| Price: | Par
|
| Yield: | 2.5%
|
| Conversion premium: | 30%
|
| Conversion price: | $53.86
|
| Conversion rate: | 18.5670
|
| Call options: | Non-callable until July 15, 2022 and then subject to a 130% hurdle
|
| Put options: | None
|
| Pricing date: | July 25
|
| Settlement date: | July 30
|
| Distribution: | Rule 144A
|
| Talk: | Coupon of 2% to 2.5% and initial conversion premium of 27.5% to 32.5%
|
| Stock symbol: | NYSE: TPB
|
| Stock price: | $41.43 at market close July 25
|
| Market capitalization: | $811.59 million
|
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