Open Solutions $125 million proceeds discount cash-to-zero convertible talked at 3.25%-3.75% yield, up 30%-35%

By Ronda Fears

Nashville, Jan. 26 - Open Solutions Inc. launched $125 million in proceeds of 30-year discount cash-to-zero convertible notes after the market close Wednesday with guidance for a yield to maturity of 3.25% to 3.75% with a 30% to 35% initial conversion premium.

Merrill Lynch & Co. Inc. is sole bookrunner of the Rule 144A deal, which is slated to price after the market close Thursday. The co-manager is Wachovia Securities.

At an estimated issue price of 45.021 the issue would pay a cash coupon of 1.5757 for seven years for a 3.5% yield to maturity.

The senior subordinated notes will be non-callable for seven years, with cash-only puts in years seven, 10, 15, 20 and 25. There is a 130% contingent conversion trigger. There also is a cash settlement feature.

Dividend and takeover protection provisions are included.

There is an $18.75 million proceeds greenshoe available.

Glastonbury, Conn.-based Open Solutions, which provides software services to financial institutions, said it would use proceeds for working capital and general corporate purposes.

Open Solutions shares closed Wednesday up 39 cents, or 1.70%, at $23.30. In after-hours trading, news of the convertible offering sent the stock down by $1.30, or 5.58%.

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