Oct. 22, 2009 (Business Wire) -- Navistar International Corporation (NYSE:NAV) announced today that it has priced a public offering of $1 billion aggregate principal amount of its senior notes due 2021. Navistar announced also the pricing of its public offering of $550 million of its senior subordinated convertible notes due 2014. The convertible notes offering size was increased to $550 million in gross proceeds based on market demand. The net proceeds will be used to repay in full amounts outstanding under its $1.1 billion term loan and $400 million synthetic revolver senior unsecured credit facilities, which expire in January 2012, as well as other general corporate purposes. In connection with the convertible notes offering, Navistar has granted the underwriters an over-allotment option, exercisable within 13 days, to purchase up to an additional $75 million of convertible notes.
“The deal has allowed us to improve our capital structure by extending maturities of our debt,” said A.J. Cederoth, Navistar’s executive vice president and chief financial officer.
The senior notes will pay interest semiannually at a rate of 8.25% per annum. The convertible notes will pay interest semiannually at a rate of 3.00% per annum and will be convertible, under certain circumstances, into cash, shares of Navistar common stock, or a combination of cash and shares of Navistar common stock, at Navistar’s election, at an initial conversion rate of 19.8910 shares of Navistar common stock per $1,000 principal amount of senior subordinated convertible notes, which is equivalent to an initial conversion price of approximately $50.27 per share of common stock, subject to adjustment in certain circumstances.
Also in connection with the convertible notes offering, Navistar entered into convertible note hedge transactions with separate affiliates of certain of the underwriters (the hedge counterparties) and also entered into warrant transactions with the hedge counterparties.
The senior notes offering and the convertible notes offering are being conducted as separate public offerings, although the senior notes offering is conditioned upon the completion of the convertible notes offering such that Navistar has sufficient net proceeds to repay all amounts outstanding under its existing credit facilities. The completion of the convertible notes offering is not conditioned upon the completion of the senior notes offering. The closing of each offering is expected to occur on Oct. 28, 2009. Each closing is subject to customary closing conditions.
The senior notes offering is being led by Credit Suisse, and the convertible notes offering is being led by J.P. Morgan.
