Novellus Systems plans to price $525 million 30-year convertibles to yield 2.5%-3%, up 15%-20%

By Rebecca Melvin

New York, May 4 - Novellus Systems Inc. planned to price $525 million of 30-year senior convertible notes after the market close Wednesday that were talked to yield 2.5% to 3% with an initial conversion premium of 15% to 20%, according to a market source.

The Rule 144A deal was being sold via J.P. Morgan Securities LLC and Merrill Lynch as the joint bookrunners.

There is a $75 million over-allotment option.

The notes have contingent conversion at a 130% price hurdle. The notes will be non-callable until May 21, 2021 and then will be provisionally callable at a price hurdle of 150%. There are no puts.

Proceeds of up to $400 million will be used to repurchase shares from purchasers of notes in this offering in privately negotiated transactions.

Novellus may also use a portion of the net proceeds to repurchase additional shares of Novellus' common stock from time to time under Novellus' $940 million share repurchase program.

The $940 million share repurchase program includes $340 million remaining from Novellus' previously authorized share repurchase program and an additional $600 million of newly authorized share repurchases.

Any remaining proceeds will be used for general corporate purposes, which may include the acquisition of complementary businesses, products or technologies.

San Jose, Calif.-based Novellus is a semiconductor equipment maker.

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