OSI to sell $225 million 5.5-year convertible notes at 1.125%-1.625%, up 35%-40%

By Stephanie N. Rotondo

Seattle, Feb. 14 – OSI Systems Inc. is planning a $225 million offering of convertible senior notes due Sept. 1, 2022, according to a company press release published Tuesday.

The notes are talked to yield 1.125% to 1.625% with an initial conversion premium of 35% to 40%.

BofA Merrill Lynch, Wells Fargo Securities LLC, J.P. Morgan Securities LLC and Jefferies are running the Rule 144A offering.

An investor call is scheduled for Wednesday, with pricing expected after the midweek session ends.

There is a $33.75 million over-allotment option.

Conversions will be settled with cash, common stock or a combination, at the company’s option.

The notes are callable on or after March 6, 2020, but only if the stock price hits a 130% price hurdle.

Proceeds will be used to repay borrowings under a credit facility, to repurchase up to $50 million shares of common stock from buyers of the new convertibles and for general corporate purposes.

In regards to the stock repurchase, the price per share is expected to be in line with the closing price of the stock on the date the convertible debt offering is priced.

OSI is a Hawthorne, Calif.-based vertically integrated designer and manufacturer of specialized electronic systems and components for critical applications in the homeland security, health care, defense and aerospace industries.

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