BorgWarner Announces $275 Million Convertible Senior Note Offering
06 April 2009 - 8:54PM
PR Newswire (US)
AUBURN HILLS, Mich., April 6 /PRNewswire-FirstCall/ -- BorgWarner
Inc. (NYSE:BWA), a global supplier of highly engineered automotive
systems and components, primarily for powertrain applications,
today announced that it intends to offer and sell, subject to
market and other conditions, approximately $275 million in
aggregate principal amount of convertible senior notes due 2012.
BorgWarner also intends to grant to the underwriters of the notes
an option to purchase up to an additional $41.25 million aggregate
principal amount of the notes within the 13-day period beginning on
the date notes are first issued solely to cover over-allotments, if
any. The offering of convertible senior notes is intended to
increase BorgWarner's financial flexibility and strengthen its
liquidity. The notes will be general unsecured senior obligations
of BorgWarner, will pay interest semi-annually at a fixed rate, and
will be convertible at any time prior to the close of business on
the second trading day preceding the maturity date. Upon
conversion, holders of the notes will receive, at the election of
BorgWarner, cash, shares of BorgWarner's common stock or a
combination of cash and shares. Holders of the notes will have the
right to require BorgWarner to repurchase for cash all or some of
their notes upon the occurrence of certain events. The interest
rate, conversion rate and other terms of the notes are to be
determined by negotiations between BorgWarner and the underwriters.
In connection with the offering of the notes, BorgWarner expects to
enter into convertible note hedge transactions with one or more of
the underwriters of the notes or their respective affiliates (the
"hedge counterparties") and intends to use a portion of the net
proceeds from the offering to pay for the convertible note hedge
transactions. BorgWarner also expects to enter into separate
warrant transactions with the hedge counterparties, which would
result in additional proceeds to BorgWarner. In connection with the
convertible note hedge and warrant transactions, the hedge
counterparties have advised BorgWarner that they or their
affiliates may enter into various derivative transactions with
respect to BorgWarner's common stock concurrently with or shortly
after pricing of the notes. These transactions could have the
effect of increasing or preventing a decline in the price of
BorgWarner's common stock concurrently with or following the
pricing of the notes. In addition, the hedge counterparties or
their affiliates may from time to time, following the pricing of
the notes, modify their respective hedge positions by entering into
or unwinding various derivative transactions with respect to
BorgWarner's common stock or by purchasing or selling BorgWarner's
common stock in secondary market transactions during the term of
the notes (and are likely to do so during any cash settlement
averaging period related to the conversion of the notes). These
activities could have the effect of decreasing the price of
BorgWarner's common stock and could adversely affect the price of
the notes during any cash settlement averaging period related to
the conversion of the notes. BorgWarner expects to use the net
proceeds of the offering for general corporate purposes, including
to repay short-term indebtedness, after applying a portion of the
net proceeds for the cost of the convertible note hedges as offset
by the proceeds of the warrant transactions, each as described
above. If the underwriters exercise their option to purchase
additional notes, BorgWarner will use a portion of the net proceeds
from the sale of the additional notes to increase ratably the
number of shares underlying the convertible note hedge transactions
and expects the hedge counterparties to increase ratably the number
of shares underlying the warrant transactions, which would result
in additional proceeds to BorgWarner. BorgWarner expects to use the
remainder of the net proceeds from any sale of additional notes for
general corporate purposes, including to repay short-term
indebtedness. In connection with the offering, Morgan Stanley,
Merrill Lynch & Co., Citi and Deutsche Bank are acting as joint
book-running managers. The issuer has filed a registration
statement including a prospectus and a prospectus supplement with
the SEC for the offering to which this communication relates.
Before you invest, you should read the prospectus and prospectus
supplement in that registration statement and other documents the
issuer has filed with the SEC for more complete information about
the issuer and this offering. You may obtain these documents for
free by visiting EDGAR on the SEC Web site at http://www.sec.gov/.
Alternatively, the issuer, any underwriter or any dealer
participating in the offering will arrange to send you the
prospectus and the prospectus supplement if you request them by
contacting Morgan Stanley (address: Morgan Stanley & Co.
Incorporated, 180 Varick St, 2nd Floor, New York, NY 10014,
Attention: Prospectus Department; email: ; telephone: (866)
718-1649), Merrill Lynch & Co. (address: Merrill Lynch, Pierce,
Fenner & Smith Incorporated at 4 World Financial Center, New
York, NY 10080, Attn: Prospectus Department; telephone: (866)
500-5408), Citi (address: Citi, Brooklyn Army Terminal, 140 58th
Street, 8th floor, Brooklyn, New York 11220, Attn: Prospectus
Department; telephone: (800) 831-9146) or Deutsche Bank Securities
(address: Deutsche Bank Securities Inc., Attn: Prospectus
Department, 100 Plaza One, Jersey City, New Jersey 07311,
telephone: (800) 503-4611). This press release does not constitute
an offer to sell or the solicitation of an offer to buy any
convertible senior notes or any other securities, nor will there be
any sale of convertible senior notes or any other securities in any
state or jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction. Statements
contained in this news release may contain forward-looking
statements as contemplated by the 1995 Private Securities
Litigation Reform Act that are based on management's current
expectations, estimates and projections. Words such as "outlook",
"expects," "anticipates," "intends," "plans," "believes,"
"estimates," variations of such words and similar expressions are
intended to identify such forward-looking statements.
Forward-looking statements are subject to risks and uncertainties,
many of which are difficult to predict and generally beyond our
control, that could cause actual results to differ materially from
those expressed, projected or implied in or by the forward-looking
statements. Such risks and uncertainties include: fluctuations in
domestic or foreign vehicle production, the continued use of
outside suppliers, fluctuations in demand for vehicles containing
our products, changes in general economic conditions, and other
risks detailed in our filings with the Securities and Exchange
Commission, including the Risk Factors, identified in our most
recently filed Annual Report on Form 10-K and in the preliminary
prospectus relating to the offering. In particular, the success of
the offering described above and the sale of the notes are subject
to market and other conditions, not all of which are within
BorgWarner's control. There is no assurance that BorgWarner will
successfully complete the proposed offering on the anticipated
terms or at all. We do not undertake any obligation to update any
forward-looking statements. DATASOURCE: BorgWarner Inc. CONTACT:
Mary Brevard, BorgWarner, +1-248-754-0881 Web Site:
http://www.borgwarner.com/
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