Lincare $250 million convertibles talked to yield 2.5-3.0%, up 70-75%

By Ronda Fears

Nashville, June 5 - Lincare Holdings Inc. launched $250 million of 30-year convertible senior unsecured debentures early Thursday with talk putting the yield at 2.5% to 3.0% with a 70% to 75% initial conversion premium.

The Rule 144A deal was set to price after the close Thursday.

JPMorgan and Banc of America Securities are joint bookrunning lead managers.

Lehman Brothers analysts put the deal 2.57% rich, at the midpoint of guidance, using a credit spread of 275 basis points over Treasuries and a 27% stock volatility.

Merrill Lynch & Co. analysts put it 0.7% cheap, at the midpoint of guidance, using a credit spread of 230 basis points over Treasuries and a 30% stock volatility.

The issue will be non-callable for five years with puts in years five, seven, 10 and 15. There are contingent conversion and contingent payment triggers, both at 120%.

Lincare plans to use up to $55 million of proceeds to repurchase stock sold short by purchasers of the debentures in negotiated transactions concurrently with the offering.

The balance of proceeds will be used for general corporate purposes, which may include repaying outstanding borrowings under its revolving credit facility and repurchases of additional stock.

Lincare shares closed Thursday up 59c, or 1.92%, to $31.37.

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