Illumina talks $650 million five-year convertible notes at 0% coupon, up 37.5%-42.5%

By Abigail W. Adams

Portland, Me., Aug. 15 – Illumina, Inc. plans to price $650 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% and an initial conversion premium of 37.5% to 42.5%, according to a market source.

BofA Merrill Lynch and Goldman Sachs & Co. are the bookrunners for the Rule 144A deal, which carries a greenshoe of $100 million.

The notes are non-callable for three years and then subject to a 130% hurdle with a make-whole. There is dividend and takeover protection.

Conversion will be settled in cash, shares or a combination of both.

Proceeds will be used to repurchase up to $150 million of common stock and for general corporate purposes, which may include the repayment of the company’s 0% convertible notes due 2019.

Illumina is a San Diego-based developer and manufacturer of systems for analysis of genetic variation and biological function for pharmaceutical and biotech companies.

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