Lumentum talks $500 million long six-year convertibles to yield 1.25%-1.75%, up 27.5%-32.5%

By Abigail W. Adams

Portland, Me., June 12 – Lumentum Holdings Inc. plans to price $500 million of long six-year convertible notes after the market close on Tuesday with price talk for a coupon of 1.25% to 1.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Goldman Sachs & Co. LLC is bookrunner for the Rule 144A offering, which carries a greenshoe of $75 million.

The notes are non-callable until June 22, 2026 and then subject to a 130% hurdle.

There is takeover and dividend protection.

The notes will be settled in cash, shares or a combination of both at the company’s option.

Proceeds will be used to repurchase a portion of the company’s 0.25% convertible notes due 2024 and up to $150 million of its common stock in privately negotiated transactions.

Remaining proceeds will be used for general corporate purposes, which may include the repayment or repurchase of debt.

Lumentum is a San Jose, Calif.-based designer and manufacturer of optical and photonic products.

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