JBT Marel prefunds CB maturity with US$500m raise
JBT Marel prefunded the maturity of its existing convertible bond with a new US$500m CB.
Goldman Sachs and Wells Fargo were joint bookrunners on the five-year CB priced at 0.375% coupon and 32.5% conversion premium on Thursday, through the aggressive ends of 0.5%–1% and 27.5%–32.5% terms marketed for one day. The banks used a credit spread and implied vol of SOFR+200bp and 35 in marketing the CB, assumptions that investors viewed as reasonable.
The food processing technology company purchased a capped call to elevate dilution to double consideration from the new CB to double its current share. The bulk of the money from the CB was used to repay borrowings on a revolving credit facility.
JBT opted to not concurrently repurchase a portion of a US$402.5m 0.25% CB that matures in May 2026.
JBT’s shares closed Wednesday's session ahead of the CB pricing at US$141.44, near their annual high. The 0.25s, which are convertible at US$169.61, trade at 101 cents on the dollar, so it doesn’t make sense to pay up now to buy them back.
“The company is prefunding, rather than buying back its existing notes on this deal,” said one banker on the deal. “Why would they be paying more to buy them back now?”
JBT Marel designs, makes and service food processing equipment to optimise food yield and improve food safety.
“JBT fits into the tech space, but we’re not seeing the high volatility or tight credit spread in tech companies,” the banker said.
JBT Marel had US$638.2m borrowings drawn under its revolving credit facility as of June 30.