Rocket Lab talks $275 million five-year convertible notes to yield 3.75%-4.25%, up 27.5%-32.5%

By Abigail W. Adams

Portland, Me., Jan. 31 – Rocket Lab USA Inc. plans to price $275 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 3.75% to 4.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $41.25 million.

The notes are non-callable until Feb. 1, 2027 and then subject to a 130% hurdle.

They will be settled in cash, shares or a combination of both at the company’s option.

They are putable upon a fundamental change.

In connection with the offering, the company will enter into capped call transactions.

Proceeds will be used to cover the cost of the call spread, $40 million will be used to repay a portion of borrowings from its equipment financing agreement with the remaining amounts to be used for general corporate purposes, which may include potential acquisitions or strategic transactions.

Rocket Lab is a Long Beach, Calif.-based aerospace manufacturer.

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