Mentor $125 million convertible talked at 2.75-3.25% yield, up 25-30%

By Ronda Fears

Nashville, Dec. 16 - Mentor Corp. launched $125 million of 20-year convertible notes in the overnight market talked to yield 2.75% to 3.25% with a 25% to 30% initial conversion premium for pricing before the open Wednesday.

Credit Suisse First Boston is bookrunner of the 144A deal.

The subordinated notes will be non-callable for five years with puts in years five, 10 and 15.

There also is a 120% contingent conversion trigger.

A $25 million greenshoe is available.

Mentor said it will use $35 million of proceeds, on a net basis, to enter convertible note hedge and warrant transactions and repurchase stock from investors buying the notes.

The Santa Barbara, Calif.-based breast implant maker said it would use the balance of proceeds for general corporate purposes, which may include additional repurchases of stock.

Also, the company said it may use a portion of proceeds for acquisitions and, pending such uses, intends to invest in investment-grade obligations and interest bearing money market instruments.

Mentor shares closed Tuesday down 14 cents, or 0.62%, to $22.53.

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