Knowles to sell $125 million 5.5-year convertibles to yield 3.25%-3.75%, up 27.5%-32.5%

By Rebecca Melvin

New York, April 27 – Knowles Corp. launched an offering of $125 million of 5.5-year convertible senior notes after the market close on Wednesday for pricing after the close on Thursday.

Pricing was talked at a 3.25% to 3.75% coupon and a 27.5% to 32.5% initial conversion premium, according to market sources.

There is an $18.75 million greenshoe for the Rule 144A deal, which was being sold via bookrunning manager J.P. Morgan Securities LLC and joint lead manager BofA Merrill Lynch.

Co-managers include HSBC Securities (USA) Inc., Wells Fargo Securities LLC and PNC Capital Markets LLC.

The notes are non-callable for life with no puts, and they have takeover protection.

In connection with the pricing of the notes, Knowles expects to enter into privately negotiated convertible note hedge and warrant transactions with initial purchasers of the bonds, or a call spread.

Proceeds will be used to reduce borrowings outstanding under Knowles’ term loan facility, with a portion earmarked to pay the cost of the call spread.

Itasca, Ill.-based Knowles is a supplier of advanced micro-acoustic, specialty components and human interface services.

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