Oak Street greenshoe lifts convertibles due 2026 to $920 million

By Taylor Fox

New York, March 16 – Underwriters for Oak Street Health, Inc.’s 0% convertible notes due 2026 fully exercised their $120 million greenshoe, increasing the total deal size to $920 million, according to an 8-K filing with the Securities and Exchange Commission.

The company previously priced an upsized $800 million of five-year convertible notes after the market close on Thursday at par with an initial conversion premium of 42.5%.

As previously reported, pricing came at the rich end of price talk for a coupon of 0% to 0.5% and the cheap end of talk for an initial conversion premium of 42.5% to 47.5%.

J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC are joint bookrunners for the Rule 144A offering.

The initial size of the offering was $750 million with a greenshoe of $112.5 million.

The notes are non-callable until March 20, 2024 and then subject to a 130% hurdle.

They are putable upon a fundamental change.

In connection with the offering, the company entered into capped call transactions with a cap price of $138.875, which represents a premium of 150% over the last reported sales price of stock.

Proceeds will be used to cover the cost of the call spread and for general corporate purposes, which may include potential acquisitions or strategic transactions.

Oak Street Health is a Chicago-based network of primary care centers for adults on Medicare.

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