Stewart Enterprises : Stewart Enterprises to Offer $250 Million Senior Convertible Notes and Repurchase Approximately $64.2 Million in Class a Common Stock
06/20/2007| 04:51pm US/Eastern
Stewart Enterprises, Inc. (NASDAQ GS: STEI) today announced its
intention to commence an offering, subject to market and other
conditions, of $125 million principal amount of convertible senior notes
due 2014 and $125 million principal amount of convertible senior notes
due 2016, in each case to be offered and sold to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended. The notes will be convertible under specified circumstances.
Upon conversion, holders will receive cash up to the principal amount,
and any excess conversion value will be delivered, at the Company's
election, in cash, Class A common stock, or a combination of cash and
Class A common stock. For each series of notes, the interest rate,
conversion rate, conversion price and other terms are to be determined
by negotiations among Stewart and the initial purchasers of the notes.
The notes will be guaranteed by substantially all of the subsidiaries
that guarantee the Company's 6.25% senior
notes due 2013.
Stewart also intends to purchase call options from an affiliate of one
of the initial purchasers of the notes. The call options will offset
Stewart's exposure to dilution from conversion
of the notes because any shares Stewart would be obligated to deliver to
noteholders upon conversion would be delivered to Stewart by the
counterparty to the call options. Stewart will also sell, to the
counterparty to the call options, warrants expiring in 2014 and 2016 to
purchase the same number of shares of Class A common stock underlying
the notes, and anticipates that the warrants will have strike prices
that are higher than the conversion prices of the notes.
Stewart intends to use approximately $164 million of the net proceeds of
the offering to prepay the remaining balance of its Term Loan B,
including accrued interest. The Company intends to use the remainder of
the net proceeds to pay the net cost of the call options and warrants,
and to repurchase, concurrently with this offering, approximately $64.2
million in shares of its Class A common stock in negotiated transactions.
In connection with the call options and warrants, the affiliate of the
initial purchaser that will be a party to those transactions has advised
the Company that it expects to enter into various derivative
transactions with respect to the Company's
Class A common stock and/or purchase the Company's
Class A common stock in secondary market transactions concurrently with
or shortly after the pricing of the notes, and may enter into or unwind
various derivative transactions with respect to the Company's
Class A common stock and/or purchase or sell the Company's
Class A common stock in secondary market transactions following pricing
of the notes.
This announcement is neither an offer to sell nor a solicitation of an
offer to buy any of these securities and shall not constitute an offer,
solicitation, or sale in any jurisdiction in which such offer,
solicitation, or sale is unlawful. Any offers of the securities will be
made only by means of a private offering memorandum.
The 2014 and 2016 notes and shares of Class A common stock issuable upon
conversion of the notes have not been registered under the Securities
Act of 1933, as amended, or any state securities laws and may not be
offered or sold in the United States absent registration or an
applicable exemption from the registration requirements.
Founded in 1910, Stewart Enterprises is the second largest provider of
products and services in the death care industry in the United States.
The Company currently owns and operates 226 funeral homes and 142
cemeteries in the United States and Puerto Rico. Through its
subsidiaries, the Company provides a complete range of funeral
merchandise and services, along with cemetery property, merchandise and
services, both at the time of need and on a preneed basis.
The matters discussed in this release include forward-looking
statements. These statements are based on current expectations or
beliefs and are subject to risks and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements, including without limitation, whether or not
the Company will offer the 2014 and 2016 notes or consummate the
offering, whether or not the Company will enter into the call option or
the warrant transactions, the anticipated terms of the notes, the call
options and the warrants, and the anticipated use of the proceeds of the
offering, including the amount of Class A common stock the Company will
repurchase, all of which depend, among other things, on market
conditions and the satisfaction of closing conditions. For a detailed
discussion of other cautionary statements relating to the Company,
please refer to the Company's most recent
filings with the Securities and Exchange Commission. The Company is
providing this information as of the date of this news release and
assumes no obligation to update any forward-looking statement to reflect
events or circumstances occurring after the date of this press release.
Stewart Enterprises, Inc.
Thomas M. Kitchen, 504-729-1400
© Business Wire 2007