Kyphon plans $350 million offering of five-, seven-year convertibles

By Kenneth Lim

Boston, Jan. 30 - Kyphon Inc. plans to price $350 million of five- and seven-year convertible senior notes in two equal tranches on Wednesday after the market closes.

The $175 million five-year series is talked at a coupon of 0.75% to 1.25%, while the $175 million seven-year series is talked at a coupon of 1% to 1.5%. The initial conversion premium will be 20% to 25% for both tranches.

Each tranche has an over-allotment option for a further $25 million.

Goldman Sachs, JP Morgan and Banc of America are the bookrunners of the Rule 144A offering.

The notes will be non-callable and may not be put.

There will be dividend and takeover protection.

Kyphon, a Sunnyvale, Calif.-based maker of spinal medical devices, said it will use the proceeds of the offering to retire part of a $425 million senior syndicated bank term loan that it used to buy St. Francis Medical Technologies. It will also use the proceeds to fund convertible hedge and warrant transactions.

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