Volcano to price $100 million five-year convertible notes to yield 3%-3.5%, up 22.5%-27.5%

By Rebecca Melvin

New York, Sept. 13 - Volcano Corp. planned to price $100 million of five-year convertible senior notes after the market close Tuesday that were talked to yield 3% to 3.5% with an initial conversion premium of 22.5% to 27.5%, according to a syndicate source.

There is a greenshoe of $15 million.

The registered, off-the-shelf deal is being sold via bookrunner J.P. Morgan Securities LLC.

The notes will be non-callable for life with no puts.

Concurrently with the deal, Volcano plans to enter into convertible bond hedge and warrant transactions. A portion of the proceeds will be used to pay the cost of the hedge transactions.

Proceeds may also be used to expand Volcano's manufacturing capabilities and invest in complementary products, technologies or businesses. The balance of the net proceeds is expected to be used for working capital and general corporate purposes.

In connection with establishing its initial hedge position, the option counterparty and affiliates expect to enter into over-the-counter derivative transactions with respect to the company's common stock concurrently with and/or shortly after the pricing of the notes.

The Rancho Cordova, Calif.-based company develops, manufactures and sells intravascular ultrasound and functional measurement products for vascular and structural heart disease.

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