Mentor Graphics prices $175 million convertibles to yield 6.25%, up 60%

New York, Feb. 27 - Mentor Graphics Corp. priced $175 million of convertible subordinated debentures due 2026 to yield 6.25% with a 60% initial conversion premium.

The deal came at the cheap end of talk, which had put the coupon at 5.75% to 6.25% and the initial conversion premium at 60% to 70%.

The conversion price is $17.97.

Bookrunners Merrill Lynch & Co., Banc of America Securities and UBS Investment Bank have a greenshoe option of $25 million.

The debentures have net share settlement and contingent conversion.

They are callable beginning March 6, 2011 and putable in years seven, 10 and 15.

Mentor Graphics plans to use the proceeds from the Rule 144A deal to repurchase its existing 6.875% convertible notes due 2007 and, if the greenshoe is exercised, to buy back part of its outstanding floating-rate convertible bonds due 2023.

Wilsonville, Ore.-based Mentor Graphics specializes in producing electronics design software for semiconductor chip giants such as Intel Corp.

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