OSI Pharma $100 million 20-year convertibles talked to yield 1.75%-2.25%, up 20%-25%

By Rebecca Melvin

Princeton, N.J., Dec. 14 - OSI Pharmaceuticals Inc. plans to price $100 million of 20-year convertible senior subordinated notes, which were talked to yield 1.75% to 2.25% with an initial conversion premium of 20% to 25%, according to a syndicate source.

The Rule 144A offering of unsecured subordinated notes is expected to price Thursday after the close, the source said.

UBS Investment Bank is the bookrunner.

The notes are non-callable for five years and have a put in year five.

There is a $15 million over-allotment option.

OSI intends to use up to $25 million of proceeds to buy its common stock concurrently with pricing of the notes, as well as to enter into call spread transactions to reduce dilution from conversion of the notes. Remaining proceeds will be for general corporate purposes.

In connection with the call spread transactions, the initial purchaser of the notes or its affiliates have indicated that they will purchase shares of OSI's common stock in secondary market transactions and enter into various derivative transactions near to the time that the notes price.

Melville, N.Y.-based OSI Pharmaceuticals is an oncology-focused biotechnology company.

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