UPDATE 2-Nyrstar completes pricing of 105 mln euro bond
* Coupon set at 7 percent
* Conversion price set at 7.6203 eur/share
* To diversify funding, strengthen liquidity, fund buys
* Shares drop 8 percent
(Adds final terms, share price, analyst comment)
BRUSSELS, July 2 (Reuters) - Belgium's Nyrstar (NYR.BR), the world's biggest producer of zinc, said on Thursday it had completed the pricing of a 105 million euro ($148.2 million) convertible bond issue.
The company said in a statement that the notes would bear interest at a semi-annual rate of 7 percent, and would be settled on July 10, 2009 and mature on July 10, 2014.
The bond, which was launched through an accelerated bookbuilt placement with institutional investors, was aimed at diversifying Nyrstar's funding sources, strengthening its liquidity and funding acquisitions, the group said in a statement.
Nyrstar announced in a strategy update last week that it planned to expand into mining to complement its smelting operations, and that it would evaluate consolidation opportunities when they arose.
The group's shares dropped as much as 8.3 percent to 5.75 euros, against a 1.76 percent drop for the DJ Stoxx basic materials index .SXPP.
"The convertible could lead to dilution of the shares in the long run. That is an element that is pushing the share down," BNP Fortis analyst Marc Gevens said.
The group said the conversion price was 7.6203 euros per share, a premium of 27.5 per cent Nyrstar's average share price from pricing.
The group had said earlier it expected the conversion price to be set at a premium of between 22.5 percent and 27.5 percent over Nyrstar's average share price from Wednesday.
If all of the bonds were converted into new ordinary shares, 13,778,998 new shares would be issued, representing a dilution of 13.8 per cent of the company's ordinary share capital, the group said. Continued...
