By Rebecca Melvin
New York, Dec. 5 - Volcano Corp. priced an upsized $400 million of five-year convertible senior notes at par after the market close Tuesday to yield 1.75% with an initial conversion premium of 31%, according to a term sheet.
The registered, off-the-shelf deal was initially talked at a deal size of $350 million. There is also a $60 million greenshoe, which was upsized from an initially talked $52.5 million.
Pricing came at the price point of revised talk for the coupon; but, that was at the rich end of original coupon talk of 1.75% to 2.25%. The premium came toward the rich end of revised talk of 27.5% to 32.5% but was beyond the rich end of initial 22.5% to 27.5% talk.
The notes are non-callable with no puts.
J.P. Morgan Securities LLC and Goldman Sachs & Co. were the joint bookrunners.
Concurrently with the notes, Volcano entered into convertible bond hedge and warrant transactions with option counterparties. The strike on the warrants was set at $37.59, which boosts the initial conversion premium from the issuer's perspective to 50%.
About $31.4 million of proceeds are being used to pay the cost of the hedge transactions, with up to $105 million of the proceeds going to repurchase up to $90 million of the company's outstanding 2.875% convertible senior notes due 2015.
Volcano may also use a portion of the proceeds to invest in or acquire complementary products, businesses, or technologies, while any remaining proceeds are intended for working capital and general corporate purposes.
Rancho Cordova, Calif.-based Volcano develops, manufactures and sells intravascular ultrasound and functional measurement products for vascular and structural heart disease.
| Issuer: | Volcano Corp.
|
| Issue: | Convertible senior notes
|
| Amount: | $400 million, upsized from $350 million
|
| Greenshoe: | $60 million, upsized from $52.5 million
|
| Maturity: | Dec. 1, 2017
|
| Bookrunners: | J.P. Morgan Securities LLC, Goldman Sachs & Co.
|
| Coupon: | 1.75%
|
| Price: | Par, $1,000
|
| Yield: | 1.75%
|
| Conversion premium: | 31%
|
| Conversion price: | $32.83
|
| Conversion ratio: | 30.4612
|
| Call: | Non-callable
|
| Put: | No puts
|
| Call spread: | Yes, boosts premium from the issuer's perspective to 50%
|
| Takeover protection: | Yes
|
| Net share settlement: | Yes
|
| Price talk: | 1.75%, up 27.5%-32.5%, revised from 1.75%-2.25%, up 22.5%-27.5%
|
| Pricing date: | Dec. 4, after the close
|
| Settlement date: | Dec. 10
|
| Distribution: | Registered, off the shelf
|
| Stock symbol: | Nasdaq: VOLC
|
| Stock reference price: | $25.06
|
| Warrant strike price: | $37.59
|
| Market capitalization: | $1.37 billion
|
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