Veritas $500 million overnight convertible talked to yield 0.25%, up 50-55%

By Ronda Fears

Nashville, July 28 - Veritas Software Corp. returned to the convertible market with an overnight $500 million deal talked to yield 0.25% with a 50% to 55% initial conversion premium, and called its existing 5.25% and 1.856% convertible notes.

Goldman Sachs & Co. is sole bookrunner of the Rule 144A deal.

The 10-year subordinated notes will be non-callable for three years, with puts in years three and five. There is a 120% contingent conversion threshold.

Holders will have dividend protection by way of a conversion ratio adjustment.

There is a $100 million greenshoe available.

Veritas said it will use up to $250 million of proceeds to repurchase stock from purchasers of the new convertibles. Remaining proceeds, the company said, will be used to redeem its outstanding converts and general corporate purposes.

The company also Monday launched the redemption of the 5.25% due 2004 and 1.856% due 2006 issues, for Aug. 17.

Before then, holders can convert the issue into stock. The 5.25s have a conversion price of $9.56 and the 1.856s have an effective conversion price of $31.18. Veritas noted that it has been authorized by its board of directors to repurchase the stock associated with conversions of the 1.856% notes, over and above the $300 million authorized in its regular stock repurchase program.

If not converted, the company will redeem the 5.25s at 101.5 and the 1.856s at 87.578 in cash plus accrued interest.

In connection with the redemptions, Veritas said it will incur a $5.3 million charge related to write-off of the unamortized debt issuance costs.

Veritas shares closed Monday off 1c, or 0.03%, to $30.75.

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