By Wendy Van Sickle
Columbus, Ohio, Feb. 15 – OSI Systems Inc. priced an upsized $250 million offering of convertible senior notes due Sept. 1, 2022, at par to yield 1.25% with an initial conversion premium of 38.5% according to a Wednesday company press release[G1] .
The notes were talked to yield 1.125% to 1.625% with an initial conversion premium of 35% to 40%, and the issue size was initially planned to be $225 million.
BofA Merrill Lynch, Wells Fargo Securities LLC, J.P. Morgan Securities LLC and Jefferies are running the Rule 144A offering.
There is a $37.5 million over-allotment option, upsized from $33.75 million.
Conversions will be settled with cash, common stock or a combination, at the company’s option. The conversion rate is 9.3056 shares per each $1,000 of notes, equaling a conversion price of $107.46, representing a 38.5% premium to Wednesday’s closing share price of $77.59.
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 $35 million of common stock from buyers of the new convertibles at $77.59 a share and for general corporate purposes.
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.
| Issuer: | OSI Systems Inc.
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| Securities: | Convertible senior notes
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| Amount: | $250 million, upsized from $225 million
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| Greenshoe: | $37.5 million, upsized from $33.75 million
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| Maturity: | Sept. 1, 2022
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| Bookrunners: | BofA Merrill Lynch, Wells Fargo Securities LLC, J.P. Morgan Securities LLC and Jefferies
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| Coupon: | 1.25%
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| Price: | Par of $1,000
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| Yield: | 1.25%
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| Conversion premium: | 38.5%
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| Conversion price: | $107.46
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| Conversion rate: | 9.3056 shares
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| Call: | On or after March 6, 2020 if stock price hits 130% price hurdle
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| Pricing date: | Feb. 15
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| Settlement date: | Feb. 22
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| Distribution: | Rule 144A
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| Talk: | 1.125% to 1.625% yield, 35% to 40% premium
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| Stock symbol: | Nasdaq: OSIS
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| Reference price: | $77.59 as of Feb. 15 close
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| Market capitalization: | $1.49 billion
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