International Game to sell $500 million five-year convertibles at 3.5%-4%, up 27.5%-32.5%

By Rebecca Melvin

New York, May 4 - International Game Technology Inc. plans to price $500 million of five-year convertibles after the market close Tuesday to yield 3.5% to 4% with an initial conversion premium of 27.5% to 32.5%, according to a market source.

The Rule 144A deal, being sold via Goldman Sachs & Co., Banc of America Securities LLC, Morgan Stanley & Co. Inc. and Wachovia, includes a $75 million over-allotment option.

The notes are non-callable for life. There is a fundamental change put at 100% of principal plus interest.

International Game intends to use a portion of the net proceeds of the offering to enter into one or more hedging transactions with initial purchasers and affiliates of the paper.

The company will use the remaining proceeds to pay down outstanding revolving debt under its senior credit facility.

In connection with the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates may enter into derivative transactions related to International Game's common stock.

International Game is a Reno, Nev.-based maker of gaming machines and systems.

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