Agilent Tech $1 billion convertibles talked at 3.0-3.5% yield, 26-30% premium

*NOTE: A story that ran in the Nov. 15 edition incorrectly stated that the issue would price after the close Thursday. A corrected version of the story is as follows.

By Ronda Fears

Nashville, Tenn., Nov. 16 - Agilent Technologies Inc. launched a $1 billion offering of 20-year convertible senior notes Thursday with price talk of a 3.0% to 3.5% yield and a 26% to 30% initial conversion premium. The Rule 144A issue is set to price after the close Tuesday, via joint book-running lead managers Credit Suisse First Boston and J.P. Morgan.

The 20-year cash-coupon convertible will be non-callable for three years with put options in years five, 10 and 15. The issue is expected to be rated Baa2 by Moody's Investors Service and BBB by Standard & Poor's.

The deal was announced as the company posted weak results for fiscal fourth quarter and fiscal 2001 and was described as part of the company's strategy to help return to profitability. With a current cash balance of $1.2 billion and virtually no debt, the company said it its earnings statement that the additional cash generated from the convertible debt offering would enhance operational flexibility and help finance its restructuring program. Proceeds are earmarked for working capital and general corporate purposes, including the possible funding of acquisitions and restructuring costs.

"Continued weakness in customer demand clearly indicates that the recovery will be delayed and more gradual than we expected,'' said Ned Barnholt, Agilent president and CEO. "As a result, we are taking additional steps to further reduce our cost structure and return the company to profitability," which will include another 4,000 job cuts. "These latest cost-cutting actions - coupled with strong new product introductions and entry into new markets," Barnholt said, "are intended to return Agilent to profitability sometime during our third fiscal quarter of 2002, independent of how much improvement we see in the industry and the economy at large."

Agilent posted a fiscal fourth-quarter net gain of $197 million, or 43c per share, down from $305 million, or 66c per share, in the comparable quarter a year before. Revenues for the quarter were $1.6 billion, down 47% from a year ago. For the year, the company posted profits of $174 million, or 38c per share, down from $757 million, or $1.66 per share, in the previous fiscal year. Annual revenues were off 10% to $8.4 billion. End

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