Sea Ltd. talks $1 billion five-year convertibles at 0.75%-1.25%, up 40%-45%

By Rebecca Melvin

New York, Nov. 13 – After Sea Ltd. announced its planned $1 billion of five-year convertible notes, the deal was being talked to yield 0.75% to 1.25% with a 40% to 45% initial conversion premium, according to market sources.

The Rule 144A and Regulation S deal, which has a $150 million greenshoe, was expected to price after the market close on Wednesday. Goldman Sachs & Co. in the bookrunner.

Using a credit spread of 300 basis points over Libor and 40% vol., the notes looked to be worth 102.4 at the midpoint of talk, according to a New York-based source.

The notes are non-callable until Dec. 1, 2022 and then are provisionally callable if shares exceed 130% of the conversion price. There is also a clean up call for amounts of less than $75 million of the notes remaining outstanding, and they are callable due to tax law changes.

There is takeover protection.

In connection with the pricing of the notes, Sea expects to enter into capped call transactions with the initial purchasers or their counterparties.

Proceeds will be used to pay the cost of the capped call transactions and for business expansion and other general corporate purposes, including potential strategic investments and acquisitions.

Sea is a Singapore-based digital entertainment, e-commerce and digital financial services company.

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