Maverick Tube Corporation Prices $220 Million 1.875% Convertible Senior Subordinated Note Offering
10 November 2005 - 12:33PM
Business Wire
Maverick Tube Corporation (NYSE:MVK) announced today that it has
priced a private offering of $220 million aggregate principal
amount of 1.875% convertible senior subordinated notes due 2025.
Maverick has also granted the initial purchaser of the notes a
30-day option, solely to cover overallotments, to purchase up to an
additional aggregate $30 million of the notes. The sale of the
notes is expected to close on November 15, 2005, subject to
customary closing conditions. Maverick intends to use the net
proceeds of the offering to repurchase shares of Maverick common
stock in the open market and in private transactions or for other
general corporate purposes. Maverick entered into a portion of
these repurchases contemporaneously with the pricing of the notes.
In addition, Maverick intends to use approximately $25.7 million of
the net proceeds of the offering (assuming the initial purchaser
does not exercise its option to purchase additional notes to cover
overallotments) to pay the net cost of the convertible note hedge
and warrant transactions described below. The notes will be
convertible beginning on August 15, 2013, or earlier upon the
occurrence of certain events, into a combination of cash and shares
of Maverick's common stock at an initial conversion rate of 24.6406
shares per $1,000 principal amount of notes (equivalent to an
initial conversion price of $40.58 per share of common stock). The
initial conversion price represents a premium of approximately 21%
to the $33.54 per share closing price of Maverick's common stock on
the New York Stock Exchange on November 9, 2005. The notes will
provide for "net share settlement" of any conversions, meaning that
upon any conversion Maverick will pay the noteholder an amount in
cash of up to the lesser of the conversion value or the par value
of the notes and will settle any excess of the conversion value
above the notes' par value in common stock. In connection with the
offering, Maverick has entered into convertible note hedge and
warrant transactions in respect of its common stock with an
affiliate of the initial purchaser of the notes. These transactions
are intended to reduce the potential dilution upon future
conversion of the notes by providing Maverick with the option,
subject to certain exceptions, to acquire shares which offset the
delivery of newly issued shares upon settlement of conversions of
the notes. This would have the economic effect to Maverick of
increasing the conversion price of the notes to $52.00 per share,
representing a 55% conversion premium to the per share closing
price on November 9, 2005. If the initial purchaser exercises its
option to purchase additional notes to cover overallotments,
Maverick may enter into additional convertible note hedge and
warrant transactions. The convertible notes will pay interest
semiannually in arrears through maturity at an annual rate of
1.875% and will mature on November 15, 2025. Maverick may redeem
for cash all or part of the notes (i) on November 15, 2013 at a
price equal to 100.25% of the principal amount of the notes plus
accrued and unpaid interest, or (ii) after November 15, 2013 at a
price equal to 100% of the principal amount of the notes plus
accrued and unpaid interest. Holders of the notes will have the
right to require Maverick to purchase for cash all or any portion
of their notes (i) on November 15, 2013 at a price equal to 100.25%
of the principal amount of the notes plus accrued and unpaid
interest and (ii) on November 15, 2015, November 15, 2020 and upon
the occurrence of a fundamental change at a price equal to 100% of
the principal amount of the notes plus accrued and unpaid interest.
The notes will be subordinated to existing and future senior
indebtedness and will be pari passu with Maverick's existing senior
subordinated notes due 2033. The other party to the convertible
note hedge and warrant transactions has advised Maverick that it
has purchased shares of Maverick's common stock. If Maverick enters
into additional convertible note hedge and warrant transactions
upon an exercise by the initial purchaser of its option to purchase
additional notes to cover overallotments, the other party to such
transaction is expected to purchase shares of Maverick's common
stock or enter into over-the-counter derivatives transactions
linked to Maverick's common stock contemporaneously with such
transaction. In addition, in each case, after entering into the
transactions, the other party may continue to purchase and may sell
shares of Maverick's common stock in secondary market transactions
and may enter into or unwind over-the-counter derivative
transactions. This press release shall not constitute an offer to
sell or a solicitation of an offer to buy, nor shall there be any
sale of the notes or the common stock issuable upon conversion of
the notes in any state or jurisdiction in which such offer,
solicitation or sale would be unlawful. The notes will be offered
to qualified institutional buyers in reliance on Rule 144A under
the Securities Act of 1933, as amended. The notes and the shares of
common stock issuable upon conversion of the notes have not been
registered under the Securities Act or any state securities laws,
and may not be offered or sold in the United States or to U.S.
persons absent registration or an applicable exemption from the
registration requirements. Maverick Tube Corporation is a St.
Louis, Missouri based manufacturer of tubular products in the
energy industry for exploration, production, and transmission, as
well as industrial tubing products (steel electrical conduit, HSS,
standard pipe, pipe piling, and mechanical tubing) used in various
applications. This news release may contain forward-looking
information that is based on assumptions that are subject to
numerous business risks, many of which are beyond the control of
the Company. There is no assurance that such assumptions will prove
to be accurate. Actual results may differ from these
forward-looking statements due to numerous factors, including those
described under "Risk Factors" and elsewhere in Maverick's Form
10-K for its year ended December 31, 2004.
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