Vitesse prices $90 million convertibles to yield 1.5%, up 35%

New York, Sept. 16 - Vitesse Semiconductor Corp. priced $90 million of 20-year convertible subordinated debentures after the close Thursday to yield 1.5% with a 35% initial conversion premium.

The deal came at the rich end of talk, which put the yield at 1.5% to 2.0% with a 30% to 35% initial conversion premium.

Lehman Brothers is sole bookrunner of the Rule 144A deal.

The conversion price is $3.92, equivalent to 255.1020 shares per $1,000 principal amount.

The debentures will be non-callable for three years and then with a provisional call trigger of 170% for two years. The notes include puts in years five, 10 and 15.

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

A $10 million greenshoe is available.

The Camarillo, Calif.-based company, which makes optical devices used in the networking, communications and storage industries, will use $20 million of the proceeds to repurchase 6.9 million shares of stock from note purchasers. Remaining proceeds, plus cash on its balance sheet, are expected to be used to retire Vitesse's 4% convertible notes due March 2005 although the company announced only that it would use proceeds for general corporate purposes, including product development, sales and marketing, capital expenditures and potential strategic acquisitions, or for repurchasing or repaying existing debt.

About $195 million of the 4% convertible issue is outstanding. The issue originally totaled $720 million.

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