Serena Software $150 million convertible talked at 1.25-1.75%, up 27.5-32.5%

By Ronda Fears

Nashville, Dec. 8 - Serena Software Inc. launched $150 million of 20-year convertible senior notes talked to yield of 1.25% to 1.75% with a 27.5% to 32.5% initial conversion premium. The notes will be sold on swap, for pricing after the close Wednesday.

Merrill Lynch & Co. and UBS Investment Bank are joint bookrunners of the Rule 144A deal.

Interest payments for three years, or the first six coupon payments, will be collateralized with U.S. Treasuries.

The subordinated notes will be non-callable for three years, then with a 130% trigger for two years and fully callable thereafter. There are puts in years five, 10 and 15.

There is a 120% contingent conversion trigger and a 120% contingent payment trigger.

Holders will have full dividend protection.

There is a $30 million greenshoe available.

The San Mateo, Calif.-based software firm said, after purchasing the U.S. Treasuries and up to 1 million shares of common stock from investors in the notes, it plans to use proceeds for working capital and general corporate purposes, including potential acquisitions or strategic investments. Pending such uses, the company intends to invest the funds in investment-grade securities and interest-bearing money market instruments.

Serena Software shares closed Monday up 21 cents, or 1.14%, to $18.60.

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