Skyworks overnight $160 million convertible talked at 4.5% to 5.0% yield, up 15% to 20%

By Ronda Fears

Nashville, Tenn., Nov. 5 - Skyworks Solutions Inc. was in the Rule 144A market pitching an overnight deal via lead manager Credit Suisse First Boston.

The $160 million of five-year convertible subordinated notes were talked to price to yield 4.5% to 5.0% with a 15% to 20% initial conversion premium.

The issue will be non-callable for three years.

There is a $30 million greenshoe available.

Deutsche Bank Securities Inc. convertible analysts put the deal 6.85% cheap at the midpoint of guidance, assuming a credit spread of 1,200 basis points over Libor and 50% volatility in the stock.

"The terms are not bad, but it's a small deal. For every 1 point in the stock, it's about a 10-point move in the bond, so the decline today did not help," said a convertible trader at a hedge fund in New Jersey.

Skyworks shares closed down 2.29 cents to $7.90, but traders said the stock was seen in after hours trading at $6.70.

"There's such a shortage of new deals that it'll get done," the buyside trader said.

"We're going to play. We'll probably hold it for a couple of days, then flip it."

The Woburn, Mass.-based wireless semiconductor company began operations in June, following the merger between Alpha Industries Inc. and Conexant Systems Inc.'s wireless communications business.

About $120 million of the proceeds are earmarked to repay the financing agreement with Conexant. The balance will be used for working capital, the company said.

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