Kulicke & Soffa $185 million convertible talked at 0.25-0.5%, up 27-32%

By Ronda Fears

Nashville, Nov. 20 - Kulicke & Soffa Industries Inc. launched $185 million of five-year convertible notes talked to yield 0.25% to 0.5% with a 27% to 32% initial conversion premium in the overnight Rule 144A market via bookrunner Deutsche Bank Securities.

Deutsche was re-offering the notes at 98 to 99.5, according to market sources.

The subordinated notes will be non-callable for life, and rank pari passu with Kulicke & Soffa's existing 4.75% and 5.25% notes.

"The buyers for this have to like the volatility and the longer call protection. Some arbs will take a chance," said a convertible manager in New York.

"Outright, it's a short maturity with at least some interest income, a hell of a lot less risky than the stock. Yet, it will capture a lot of the upside, and a lot of the downside."

"It's a good deal for the company," he added.

The Willow Grove, Pa.-based semiconductor firm said proceeds would be used to redeem its 4.75% convertible notes due 2006. Remaining proceeds would go toward working capital and general corporate purposes.

Holders of the new convertibles will have full dividend protection.

The issue is expected to be rated Caa2 by Moody's Investors Service and CCC+ by Standard & Poor's Corp.

Kulicke & Soffa shares closed Thursday down 58 cents, or 3.49%, to $16.06. In after-hours trading, the stock was down another 66 cents, or 4.11%.

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