A123 Systems plans $125 million five-year convertibles to yield 3.25%-3.75%, up 20%-25%

By Rebecca Melvin

New York, March 28 - A123 Systems Inc. plans to price $125 million of five-year convertible subordinated notes in a registered offering after the market close on Thursday, according to a syndicate source.

Price talk on the offering is for a coupon of 3.25% to 3.75% with an initial conversion premium of 20% to 25%.

A123 Systems also plans to price 18 million shares of common stock.

The convertibles have an $18.75 million greenshoe, and there is a greenshoe on the common stock of up to 2.7 million shares.

The registered, off-the-shelf deal is being sold via Deutsche Bank Securities Inc. and Goldman Sachs & Co. as joint bookrunners.

Morgan Stanley & Co. Inc. and Barclays Capital Inc. are joint lead managers.

Co-managers are Lazard Capital Markets and Pacific Crest Securities.

A123 is a Watertown, Mass.-based developer and maker of lithium ion batteries and systems, with a market capitalization of $826 million.

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