SunPower plans to sell $200 million five-year convertibles to yield 4.25%-4.75%, up 22.5%-27.5%

By Rebecca Melvin

New York, March 25 - SunPower Corp. planned to price $200 million of five-year convertible debentures after the close of markets Thursday that were talked to yield 4.25% to 4.75% with an initial conversion premium of 22.5% to 27.5%, according to a market source.

The Rule 144A deal has a greenshoe of $30 million and is being sold via bookrunners Credit Suisse, Deutsche Bank Securities Inc., Bank of America Merrill Lynch and Citigroup Global Markets Inc.

Proceeds are intended to replenish cash reserves to be used in its acquisition of SunRay Renewable Energy. Proceeds also will be used for working capital, for capital expenditures, for general corporate purposes, to pay the cost of cash convertible debenture hedge and warrant transactions and, potentially, for the repayment of debt.

The debentures are non-callable with no puts. They will not be convertible upon the satisfaction of customary market price trigger conditions until the first quarter of 2011.

In connection with the sale, SunPower plans to enter into convertible debenture hedge and warrant transactions intended to reduce its potential exposure to cash payments upon conversion of the debentures.

SunPower is a San Jose, Calif.-based provider of high-efficiency solar cells, solar panels and solar systems.

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