CenterPoint $225 million convertible talked at 2.75-3.25% yield, up 38-42%

By Ronda Fears

Nashville, Dec. 10 - CenterPoint Energy Inc. returned to tap convertible investors, launching $225 million of 20-year convertible notes talked to yield 2.75% to 3.25% with a 38% to 42% initial conversion premium.

Citigroup Global Markets and Deutsche Bank Securities are joint bookrunners of the Rule 144A deal, which is scheduled to price after the close Thursday.

The senior unsecured notes will be non-callable for three years with puts in years three, eight and 13.

There is a 120% contingent conversion trigger.

A $30 million greenshoe is available.

The Houston-based energy company will use proceeds to redeem a portion of the $250 million of 8.125% trust preferred securities issued by HL&P Capital Trust I, one of its subsidiary trusts. Pending that use, CenterPoint intends to use the funds to repay a portion of the borrowings under its credit facility.

Also Wednesday, Standard & Poor's and Fitch Ratings cut CenterPoint's credit outlook to negative from stable on Reliant Resources Inc.'s announcement that it doesn't plan to exercise its option to buy CenterPoint's 81% stake in Texas Genco Holdings Inc. The decision cut off a significant source of added liquidity for CenterPoint.

CenterPoint shares closed Wednesday off 16 cents, or 1.7%, to $9.24.

The CenterPoint 3.75% convertible due 2023, which was issued in May, dropped 1.625 points on Wednesday, according to a dealer, to 104.375 bid, 104.875 offered.

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