OSI Systems stock falls after $400 million convertible notes offering
Investing.com -- OSI Systems Inc (NASDAQ:OSIS) stock fell 3.1% Monday following the company’s announcement of a planned $400 million convertible senior notes offering due 2031.
The security systems and medical equipment manufacturer said it would offer the notes to qualified institutional buyers in a private placement, with an option for initial purchasers to buy up to an additional $60 million in principal amount. The notes will be senior, unsecured obligations that accrue interest semi-annually and mature on February 1, 2031, unless earlier repurchased, redeemed, or converted.
OSI Systems plans to use approximately $175 million of the net proceeds to repurchase shares of its common stock in privately negotiated transactions. The remainder will go toward repaying a portion of its revolving credit facility, paying related fees, and other general corporate purposes.
The notes will be convertible under certain circumstances, with OSI settling conversions in cash and potentially shares of its common stock. They will also be redeemable at OSI’s option on or after February 6, 2029, but only if the company’s stock price exceeds 130% of the conversion price for a specified period.
The interest rate, initial conversion rate, and other terms will be determined when the offering is priced. The concurrent share repurchases may result in OSI’s stock trading at higher prices than would otherwise occur, potentially leading to a higher initial conversion price for the notes.
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