Cepheid plans $250 million seven-year convertibles to yield 1.5%-2%, up 27.5%-32.5%

By Rebecca Melvin

New York, Feb. 3 - Cepheid launched an offering of $250 million of seven-year convertible senior notes after the market close on Monday that it planned to price after the market close on Tuesday, according to a syndicate source.

Pricing was talked at a coupon of 1.5% to 2% with an initial conversion premium of 27.5% to 32.5%.

The Rule 144A deal has a $37.5 million of over-allotment option and was being sold via joint bookrunners Morgan Stanley & Co. LLC and Jefferies LLC.

Proceeds of the seven-year non-call paper will be used for general corporate purposes, including potential acquisitions and strategic transactions, and to pay the cost of the capped call transactions.

Cepheid expects to enter into capped call transactions with one or more of the initial purchasers of the notes or their respective affiliates. The capped call transactions are expected to reduce potential dilution and/or offset the potential cash payments that Cepheid could be required to make in excess of the principal amount upon conversion of the notes.

Sunnyvale, Calif.-based Cepheid is a molecular diagnostics company.

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