New Issue: Mentor Graphics $150 million convertibles at 6.875% yield, up 45%

By Ronda Fears

Nashville, Tenn., May 30 - Mentor Graphics Inc. sold $150 million of five-year convertible subordinated notes at par to yield 6.875% with a 45% initial conversion premium. Banc of America Securities was lead manager of the Rule 144A deal, which sold at the aggressive end of price talk.

Guidance had put the yield at 6.875% to 7.375% and initial conversion premium at 40% to 45%.

Wilsonville, Ore.-based Mentor Graphics, plans to use proceeds to fund its pending acquisition of Innoveda Inc.

Mentor Graphics provides software and hardware design tools for electronic design automation. Innoveda provides electronic design automation software and services.

Term of the new deal are:

Issuer: Mentor Graphics Inc.

Amount: $150 million

Greenshoe: $22.5 million

Lead Manager: Banc of America Securities

Maturity Date: June 15, 2007

Coupon: 6.875%

Issue Price: par

Yield-to-maturity: 6.875%

Conversion Premium: 45%

Conversion Price: $23.27

Conversion Ratio: 42.9738

Call: non-callable for three years

Settlement Date: June 3

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