Westport, Conn.-based Terex Corp. last week announced that it is seeking approximately $600 million in new financing. The company intends to offer, subject to market and other conditions, $300 million principal amount of 10.875-percent senior notes due 2016 at an issue price of 97.633 percent, and $150 million principal amount of 4.00-percent convertible senior subordinated notes due 2015. In certain circumstances and during certain periods, the convertible senior subordinated notes will be convertible at an initial conversion rate of 61.5385 shares of common stock per $1,000 principal amount of convertible notes, equivalent to an initial conversion price of approximately $16.25 per share of common stock, subject to adjustment in some events.
Upon conversion, Terex will deliver cash up to the aggregate principal amount of the convertible senior subordinated notes to be converted and shares of Terex common stock in respect of the remainder, if any, of Terex’s convertible obligation in excess of the aggregate principal amount of the notes being converted. Terex has granted the underwriters an option to purchase up to an additional $22.5 million principal amount of convertible notes on the same terms to cover any over-allotments.
The company is also offering 11 million shares of Terex common stock priced at $13 per share to the public. Terex has granted the underwriters an option to purchase up to an additional 1.65 million shares of common stock to cover any over-allotments.
Terex intends to use the net proceeds from the offering to pay down certain outstanding amounts under its senior credit facility and for general corporate purposes. Terex intends to grant the underwriters an option to purchase up to an additional $22.5 million in convertible notes and 1,650,000 shares of common stock to cover over-allotments, if any.
Terex intends to offer and sell these securities under its existing shelf registration statement filed with the Securities and Exchange Commission in July 2007 and amended on Nov. 6, 2007. When available, copies of the prospectus supplement and accompanying base prospectus related to this offering may be obtained from: Credit Suisse, Attention: Prospectus Department, One Madison Avenue, New York, NY 10010 (tel:800-221-1037); UBS Investment Bank, Attention: Prospectus Department, 299 Park Ave., New York, NY 10171 (tel:888-827-7275); and Citi, Brooklyn Army Terminal, 140 58th Street, 8th Floor, Brooklyn, NY 11220 (tel:800-831-9146).
The public offerings are expected to close on June 3, subject to customary closing conditions. Credit Suisse, UBS Investment Bank and Citi are acting as joint book-running managers for the offerings. Terex intends to use the net proceeds from the offerings to pay down certain outstanding amounts under its senior credit facility and for general corporate purposes.
In related news, Terex Corp. last week reached agreement on an amendment to its bank credit facility, with the effectiveness of the amendment being conditional on the successful completion of its previously announced capital markets transactions.
Pursuant to the amendment, Terex would reduce its domestic revolving credit commitments under the credit facility by $150 million, prepay approximately $58 million principal amount of its term loans under the credit facility, and increase the interest rates charged under its credit facility. The amendment would also eliminate certain existing financial covenants dealing with the company’s consolidated leverage ratio and consolidated fixed charge coverage ratio, and instead require the company to maintain liquidity of not less than $250 million on the last day of each fiscal quarter through June 30, 2011, and thereafter, maintain a specified senior secured leverage ratio.
Additionally, the amendment provides the company added flexibility in various restrictive covenants, limits the company’s ability under certain circumstances to repurchase stock, pay dividends or redeem debt, and requires the company to provide certain collateral to secure its obligations under the credit facility.
Terex Corp. is a diversified global manufacturer with 2008 net sales of $9.9 billion. Terex operates in four business segments: Terex Aerial Work Platforms, Terex Construction, Terex Cranes, and Terex Materials Processing & Mining.