FWP
FILED PURSUANT TO RULE 433
REGISTRATION NO. 333-149539
April 6, 2009
Immediate Release
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Contact
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Mary Brevard
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248.754.0881 |
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BORGWARNER PRICES
CONVERTIBLE SENIOR NOTE OFFERING
AND INCREASES OFFERING SIZE TO $325 MILLION
Auburn Hills, Michigan, April 6, 2009 BorgWarner Inc. (NYSE: BWA), a global supplier of highly
engineered automotive systems and components, primarily for powertrain applications, today
announced that it has priced a registered underwritten public offering of $325.0 million aggregate
principal amount of its 3.50% convertible senior notes due 2012. In addition, BorgWarner has
granted the underwriters an option to purchase up to an additional $48.75 million aggregate
principal amount of notes within the 13-day period beginning on the date the notes are first
issued, solely to cover over-allotments, if any. The offering of the notes is intended to increase
BorgWarners financial flexibility and strengthen its liquidity. The closing of the offering is
expected to occur on April 9, 2009, subject to various customary closing conditions.
The notes will pay interest semi-annually at a rate of 3.50% per year and will mature on April
15, 2012. Holders of the notes may convert their notes at their option at any time prior to the
close of business on the second scheduled trading day immediately preceding the maturity date of
the notes, in multiples of $1,000 principal amount. The initial conversion rate for the notes is
30.4706 shares of BorgWarner common stock per $1,000 principal amount of notes (representing an
initial conversion price of approximately $32.82 per share of common stock), subject to adjustment
in certain circumstances. The initial conversion price represents a conversion premium of 27.5%
over the last reported sale price of the common stock on the New York Stock Exchange on April 6,
2009, of $25.74 per share. Upon conversion, BorgWarner will pay or deliver, as the case may be,
cash, shares of its common stock or a combination thereof at its election, in respect of the
conversion value above the notes principal amount.
BorgWarner may not redeem the notes prior to their maturity. Holders of the notes may require
BorgWarner to purchase all or a portion of their notes at a price equal to 100% of the principal
amount of the notes to be purchased, plus accrued and unpaid interest, in cash, upon the occurrence
of certain fundamental changes involving BorgWarner.
The notes will be senior unsecured obligations and will rank equally with all of BorgWarners
other existing and future senior unsecured debt.
BorgWarner estimates that the net proceeds of this offering will be approximately $314.9
million (or approximately $362.3 million if the underwriters over-allotment option is exercised in
full), after deducting discounts and commissions and estimated expenses. BorgWarner intends to use
approximately $21.9 million of the net proceeds of this offering to pay the net cost of the
convertible note hedge and warrant transactions described below (which amount represents the cost
of the convertible note hedge transactions, partially offset by the proceeds of the warrant
transactions). BorgWarner expects to use the remaining proceeds for general corporate purposes,
including the repayment of short-term indebtedness.
In connection with the offering of the notes, BorgWarner entered into convertible note hedge
transactions with counterparties that are affiliates of the representatives of the underwriters of
the notes. The convertible note hedge transactions are expected to reduce the potential dilution to
BorgWarners common stock upon conversion of the notes. BorgWarner also entered into warrant
transactions with the counterparties. However, the warrant transactions could separately have a
dilutive effect to the extent that the volume-weighted price per share of BorgWarners common stock
exceeds the applicable strike price of the warrants.
In connection with the convertible note hedge and warrant transactions, the hedge
counterparties have advised BorgWarner that they or their affiliates may enter into various
derivative transactions with respect to BorgWarners common stock concurrently with or shortly
after pricing of the notes. These transactions could have the effect of increasing or preventing a
decline in the price of BorgWarners common stock concurrently with or following the pricing of the
notes. In addition, the hedge counterparties or their affiliates may from time to time, following
the pricing of the notes, modify their respective hedge positions by entering into or unwinding
various derivative transactions with respect to BorgWarners common stock or by purchasing or
selling BorgWarners common stock in secondary market transactions during the term of the notes
(and are likely to do so during any cash settlement averaging period related to the conversion of
the notes). These activities could have the effect of decreasing the price of BorgWarners common
stock and could adversely affect the price of the notes during any cash settlement averaging period
related to the conversion of the notes.
If the underwriters exercise their option to purchase additional notes, BorgWarner will use a
portion of the net proceeds from the sale of the additional notes to increase ratably the number of
shares underlying the convertible note hedge transactions and expects to increase ratably the
number of shares underlying the warrant transactions as well, which would result in additional
proceeds to BorgWarner. BorgWarner expects to use the remainder of the net proceeds from any sale
of additional notes for general corporate purposes, including to repay short-term indebtedness.
Morgan Stanley, Merrill Lynch & Co., Citi and Deutsche Bank acted as joint book-running
managers in connection with the offering.
The issuer has filed a registration statement including a prospectus and a prospectus
supplement with the SEC for the offering to which this communication relates. Before you invest,
you should read the prospectus and prospectus supplement in that registration statement and other
documents the issuer has filed with the SEC for more complete information about the issuer and this
offering. You may obtain these documents for free by visiting EDGAR on the SEC Web site at
www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering
will arrange to send you the prospectus and the prospectus supplement if you request them by
contacting Morgan Stanley (address: Morgan Stanley & Co. Incorporated, 180 Varick St, 2nd Floor,
New York, NY 10014, Attention: Prospectus Department; email: prospectus@morganstanley.com;
telephone: (866) 718-1649), Merrill Lynch & Co. (address: Merrill Lynch, Pierce, Fenner & Smith
Incorporated, 4 World Financial Center, New York, NY 10080, Attn: Prospectus Department), Citi
(address: Citi, Brooklyn Army Terminal 140 58th Street, 8th floor, Brooklyn,
New York 11220, Attn: Prospectus Department; telephone: (800) 831-9146) or Deutsche
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Bank Securities (address: Deutsche Bank Securities Inc., Attn: Prospectus Department, 100
Plaza One, Jersey City, New Jersey 07311, telephone: (800) 503-4611).
This press release does not constitute an offer to sell or the solicitation of an offer to buy
any notes or any other securities, nor will there be any sale of notes or any other 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.
# # #
Statements contained in this news release may contain forward-looking statements as
contemplated by the 1995 Private Securities Litigation Reform Act that are based on managements
current expectations, estimates and projections. Words such as outlook, expects,
anticipates, intends, plans, believes, estimates, variations of such words and similar
expressions are intended to identify such forward-looking statements. Forward-looking statements
are subject to risks and uncertainties, many of which are difficult to predict and generally beyond
our control, that could cause actual results to differ materially from those expressed, projected
or implied in or by the forward-looking statements. Such risks and uncertainties include:
fluctuations in domestic or foreign vehicle production, the continued use of outside suppliers,
fluctuations in demand for vehicles containing our products, changes in general economic
conditions, and other risks detailed in our filings with the Securities and Exchange Commission,
including the Risk Factors, identified in our most recently filed Annual Report on Form 10-K and in
the prospectus relating to the offering. In particular, the closing of the notes offering is
subject to various customary closing conditions. We do not undertake any obligation to update any
forward-looking statements.
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