The company announced it will sell $330 million of convertible senior notes due in 2019. The nots have an interest rate of 0.75%, and a conversion price of $57.32, about 33% above the current stock’s price. Initial purchasers have a 30day option to buy up to an additional $49.5 million aggregate principal amount of notes.
AOL expects net proceeds of about $319.9 million from the offering. The company will use about $40 million of the proceeds to repurchase shares, and about $31.8 million to fund the cost of convertible note hedge transactions. The remaining proceeds will be used for general corporate purposes which may include more buybacks, acquisitions, and working capital.
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TheStreet Ratings team rates AOL INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AOL INC (AOL) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."