Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) today announced
the pricing of $260.0 million aggregate principal amount of its
1.875% convertible senior notes due 2024 in an underwritten public
offering. The size of the transaction was increased from the
previously announced aggregate principal amount of $250.0 million.
Atlas Air Worldwide has granted the underwriters an option to
purchase, within a 13-day period beginning on and including the
date the notes are first issued, up to an additional $39.0 million
aggregate principal amount of the notes from the company, solely to
cover over-allotments. The offering is expected to close on May 23,
2017, subject to the satisfaction of customary closing conditions.
The company estimates that the net proceeds of
this offering will be approximately $253.1 million (or $291.2
million if the underwriters’ over-allotment option is exercised in
full), after deducting the underwriters’ discounts and commissions
and estimated offering expenses.
Atlas Air Worldwide currently intends to use the
net proceeds of the offering to repay higher-cost revolving credit
facility borrowings; enhance business and financial flexibility;
support long-term growth; fund the cost of convertible note hedge
transactions (after such cost is partially offset by proceeds to
the company from the sale of warrants); and for general corporate
purposes.
The notes will be senior unsecured obligations
of Atlas Air Worldwide. The notes will mature on June 1, 2024,
unless repurchased or converted in accordance with their terms
prior to such date, and will bear interest at a rate of 1.875% per
year, payable semiannually in arrears on June 1 and December 1 of
each year, beginning on December 1, 2017. The holders of the notes
may require the company to repurchase all or any portion of their
notes for cash in the event of a fundamental change, as defined in
the indenture governing the terms of the notes. In such case, the
repurchase price would be 100% of the principal amount of the notes
being repurchased, plus any accrued and unpaid interest. The
company will not have the right to redeem the notes prior to
maturity.
Prior to the close of business on the business
day immediately preceding September 1, 2023, the notes will be
convertible only under certain circumstances. Thereafter, until the
close of business on the second scheduled trading day preceding the
maturity date, the notes will be convertible at the option of the
noteholders at any time regardless of these conditions. The
notes will be convertible into cash, shares of the company’s common
stock, or a combination of both cash and shares of the company’s
common stock at the company’s election.
The initial conversion rate for the notes is
16.3713 shares of the company’s common stock per $1,000 principal
amount of notes, which is equivalent to an initial conversion price
of approximately $61.08 per share of the company’s common stock.
The initial conversion price represents an approximately 32.5%
conversion premium to the closing price of $46.10 per share of the
company’s common stock on the NASDAQ Global Select Market on May
17, 2017, such closing price being the last reported sale price. In
addition, following certain corporate transactions that occur prior
to the maturity date, the company may be required, in certain
circumstances, to increase the conversion rate for a holder that
elects to convert its notes in connection with such a corporate
transaction.
In connection with the pricing of the notes,
Atlas Air Worldwide also entered into privately negotiated
convertible note hedge transactions as well as separate privately
negotiated warrant transactions with certain financial
institutions, collectively referred to as the option
counterparties.
The convertible note hedge transactions are
intended to reduce the potential dilution to the company’s common
stock upon conversion of the notes and/or offset potential cash
payments the company is required to make in excess of the principal
amount of converted notes in the event that the market price of the
company’s common stock is greater than the strike price of the
convertible note hedge transactions, which initially corresponds to
the initial conversion price of the notes. However, the warrant
transactions could separately have a dilutive effect on the
company’s earnings per share to the extent that the market value
per share of the company’s common stock exceeds the strike price of
the warrants under the terms of warrant transactions.
Accordingly, when the convertible note hedge
transactions and the warrant transactions are taken together, the
extent to which the convertible note hedge transactions reduce the
potential dilution to the company’s common stock (or the cash
payments in excess of the principal amount of the notes) upon
conversion of the notes is effectively capped by the warrant
transactions at the strike price of the warrants. The strike price
of the warrants will initially be $92.20 per share, which
represents a premium of 100% over the last reported sale price, and
is subject to certain adjustments under the terms of the warrant
transactions.
If the underwriters exercise their
over-allotment option, the company expects to enter into additional
convertible note hedge and warrant transactions with the option
counterparties.
In connection with establishing their initial
hedge of the convertible note hedge and warrant transactions, the
option counterparties or their respective affiliates have entered
into and/or expect to enter into various hedging transactions,
including (without limitation) derivative transactions, with
respect to the company’s common stock concurrently with or shortly
after the pricing of the notes. This activity could impact the
market price of the company’s common stock or the notes at that
time.
In addition, the option counterparties or their
respective affiliates may modify their hedge positions by entering
into or unwinding various hedging transactions, including (without
limitation) derivatives, with respect to the company’s common stock
and/or purchasing or selling the company’s common stock or other
securities of the company in secondary market transactions
following the pricing of the notes and prior to the maturity of the
notes. This activity could also cause or avoid an increase or a
decrease in the market price of the company’s common stock or the
notes, which could affect the ability of noteholders to convert
their notes and, to the extent the activity occurs during any
observation period related to a conversion of the notes, could
affect the amount and value of the consideration that noteholders
will receive upon conversion of their notes.
If the underwriters exercise their
over-allotment option, Atlas Air Worldwide expects to sell
additional warrants and use a portion of the net proceeds from the
sale of the additional notes, together with the proceeds from the
additional warrants, to enter into additional convertible note
hedge transactions and for general corporate purposes.
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 or any solicitation of an offer to buy, these
securities in any state or jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or
jurisdiction.
Morgan Stanley & Co. LLC, BNP Paribas
Securities Corp. and Citigroup will act as joint bookrunners for
the offering. Credit Agricole Securities (USA) Inc. and J.P. Morgan
Securities LLC will act as co-lead managers, with CJS Securities,
Inc., Cowen and Company, LLC, Seaport Global Securities LLC, and
Sidoti & Company, LLC acting as co-managers.
The company has filed a registration statement
(including a prospectus) and a preliminary prospectus supplement
describing the terms of the offering with the Securities and
Exchange Commission (SEC) for the offering to which this
communication relates. Before you invest, you should read the
prospectus and the preliminary prospectus supplement related to
that registration statement and other documents that the company
has filed with the SEC for more complete information about the
company and this offering.
You may get these documents for free by visiting
EDGAR on the SEC Web site at www.sec.gov. Alternatively, copies may
be obtained from Morgan Stanley & Co. LLC, Attention:
Prospectus Department, 180 Varick Street, Second Floor, New York,
NY 10014, by calling (866) 718-1649, or by emailing
prospectus@morganstanley.com; from BNP Paribas Securities Corp.,
Attention: Equity Syndicate Desk, 787 Seventh Avenue, New York, NY
10019, by calling (888) 860-5378, or by emailing
dl.nyk_elo@us.bnpparibas.com; or from Citigroup Global Markets
Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue,
Edgewood, NY 11717, by calling 800-831-9146.
About Atlas Air Worldwide:
Atlas Air Worldwide is a leading global provider
of outsourced aircraft and aviation operating services. It is the
parent company of Atlas Air, Inc., Southern Air Holdings, Inc. and
Titan Aviation Holdings, Inc., and is the majority shareholder of
Polar Air Cargo Worldwide, Inc. Our companies operate the world's
largest fleet of 747 freighter aircraft and provide customers a
broad array of Boeing 747, 777, 767, 757 and 737 aircraft for
domestic, regional and international applications.
Forward-Looking Statements
This press release contains “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995 regarding our planned offer and sale of notes
and the use of the net proceeds from any such sale. We cannot be
sure that we will complete the offering or, if we do, on what terms
we will complete the offering. Forward-looking statements are based
on current beliefs and expectations and are subject to inherent
risks and uncertainties, including those discussed under the
caption “Risk Factors” in the prospectus and prospectus supplement.
In addition, management retains broad discretion with respect to
the allocation of the net proceeds of this offering. The
forward-looking statements speak only as of the date of this
release, and Atlas Air Worldwide Holdings, Inc. is under no
obligation to, and expressly disclaims any such obligation to,
update or alter its forward-looking statements, whether as a result
of new information, future events, or otherwise.
Contacts:
Dan Loh (Investors) – (914) 701-8200
Beth Roach (Media) – (914) 701-6576
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