Sepracor $500 million overnight convertible talked to yield 0%, up 26%-34%

Nashville, Sept. 16 - Sepracor Corp. launched after the closing bell Thursday $500 million of 20-year convertible notes talked to yield 0% with a 26% to 34% initial conversion premium.

Morgan Stanley is sole bookrunner of the Rule 144A deal, which is scheduled to price before the market opens Friday.

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

There is full dividend protection by way of a conversion ratio adjustment and takeover protection via a premium make-whole provision.

A $100 million greenshoe is available.

The Marlborough, Mass.-based company said it will use up to $100 million of the proceeds to buy back common stock and, otherwise, for general corporate purposes.

The new notes will be senior to Sepracor's other three convertible issues. The 5% convertible due 2007 was quoted off about 0.125 point Wednesday at 103.25 bid, 103.75 offered. The two-tranche 0% convertibles due 2008 and 2010 were both down 1 point.

Earlier this month, Sepracor said it exchanged $504.18 million of the 0% convertibles for 16.516 million shares of stock and $66.457 million in cash, in a series of privately negotiated transactions Oct. 29 through Sept. 1. The company sold $750 million of the convertibles in January.

Sepracor convertibles had shot up sharply in March when the drugmaker announced its insomnia treatment had received an "approvable" letter from regulators, with the 0% issues gaining 40 to 50 points as the stock rose a whopping 56.5%.

On Thursday, Sepracor shares closed off 33 cents, or 0.63%, to $51.69. In after-hours trading, the stock was down another $1.69, or 3.27%.

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