OSI greenshoe lifts 1.25% 5.5-year convertibles to $287.5 million

By Susanna Moon

Chicago, Feb. 27 – OSI Systems Inc. said underwriters fully exercised the $37.5 million over-allotment option on its 1.25% convertible senior notes due Sept. 1, 2022.

The greenshoe exercise brings the total deal size to $287.5 million, according to an 8-K filing with the Securities and Exchange Commission.

As reported, OSI priced an upsized $250 million offering of the convertibles on Feb. 15 at par to yield 1.25% with an initial conversion premium of 38.5%.

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.

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.

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.

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