Thursday, October 22, 2009

Avis Budget posts prices in private offering

Rental Car giant Avis Budget Group posted a price of $300 million of 3.5% senior notes to initial buyers. Closing on the offer last Tuesday, Initial buyers have the rights to purchase $45 million of additional notes covering more securities than available.

The initial conversion price is roughly $16.25 per share equal to 61.5 shares of common shares per $1,000 of notes. This is an amazing 30% conversion premium above the closing price last Wednesday of $12.50 share maturing on October 1, 2014.

Naturally, Avis should enter a warrant transaction and buy a convertible note hedge of which 10% of net proceeds from offering will pay for the convertible note hedge and other corporate expenditures.

Buyers of convertible senior notes will have the option to purchase up to an additional $37.5 million of notes.


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