Harmonic to price $125 million five-year convertibles at 2.75%-3.25%, up 37.5%-42.5%

By Rebecca Melvin

New York, Dec. 7 – Harmonic Inc. launched an offering of $125 million of five-year convertible senior notes after the market close on Monday that were seen pricing after the market close on Tuesday.

The notes were talked to yield 2.75% to 3.25% with an initial conversion premium of 37.5% to 42.5%, according to market sources.

The Rule 144A deal has a greenshoe for up to an additional $18.75 million of notes and was being sold via BofA Merrill Lynch as bookrunner.

The notes are non-callable and will be convertible into cash, shares of Harmonic’s common stock or a combination thereof, at Harmonic's election.

About $70 million of the net proceeds are expected to be used to pay a portion of the costs associated with its previously announced acquisition of Thomson Video Networks SAS. Harmonic also intends to use up to $25 million of the net proceeds to repurchase shares of its common stock from purchasers of the notes in privately negotiated transactions effected through the initial purchaser or its affiliate as Harmonic's agent concurrently with the offering.

Harmonic may use a portion of the proceeds from the greenshoe to repurchase additional shares of its common stock under its existing share repurchase program. Any remaining proceeds will be used for working capital and general corporate purposes.

Harmonic is a San Jose, Calif.-based is video infrastructure products maker.

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