Option Care $75 million convertibles talked to yield 1.75% to 2.25%, up 35% to 40%

By Ronda Fears

Nashville, Oct. 25 - Option Care Inc. launched $75 million of 20-year convertible notes talked to yield 1.75% to 2.25% with a 35% to 40% initial conversion premium after the close Monday. A portion of proceeds are earmarked to buy back up to 1.5 million shares of common stock from the company's chairman.

UBS Investment Bank is bookrunner on the Rule 144A deal, which is slated to price after the market closes Wednesday. Piper Jaffray & Co. is the co-manager.

The senior notes will be non-callable for five years, with puts in years five, 10 and 15.

The notes carry full dividend and takeover protection for holders.

An $11.25 million greenshoe is available.

Buffalo Grove, Ill.-based Option Care said it intends to use proceeds for acquisitions, share repurchases, working capital and other general corporate purposes.

Option Care said it reached an understanding with E.J. Financial/OCI Management LP, pursuant to which E.J. Financial/OCI Management may sell back to Option Care up to 1.5 million shares of stock at a 25 cent discount to the closing price for the stock on the day of the convertible pricing.

E.J. Financial/OCI Management LP is the largest stockholder of Option Care and is controlled by John N. Kapoor, chairman of the company's board of directors. Kapoor will remain the largest stockholder if all 1.5 million shares are sold.

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