Akamai $175 million overnight convertible talked at 1%, up 45%

By Ronda Fears

Nashville, Dec. 8 - Akamai Technologies Inc. was pitching $175 million of 30-year convertible senior notes talked to yield 1% with a 45% initial conversion premium in the overnight Rule 144A market via sole bookrunner Credit Suisse First Boston.

The bonds will be non-callable for seven years with a put in year seven.

There is a 120% contingent conversion trigger.

The Cambridge, Mass.-based software firm also Monday raised its guidance for fourth-quarter and 2003 revenues.

Akamai expects fourth-quarter revenue of $43 million to $45 million, up from $42 million to $44 million estimated on Oct. 29. In fourth-quarter 2002, the company posted revenues of $35.4 million.

For 2003, Akamai said it now sees revenues of $159 million to $161 million, versus $158 million to $160 million forecast in October. In 2002, the company reported revenues of $145 million.

"We believe we are on track for another successful quarter of strong sequential revenue growth while keeping spending under tight control. This follows our third quarter's results, which were the best in the company's five-year history," said George Conrades, chief executive of Akamai, in a news release.

"In the fourth quarter to date, we are experiencing strong demand by our customers for our services in all areas, including an increase in holiday season e-commerce-related traffic."

Akamai's existing 5.5% convertible due 2007, a $300 million issue sold in June 2000, was quoted flat at 95.5 bid, 97.5 offered at one sellside shop and at 90.75 bid, 96.75 offered at another. The stock ended down 52 cents, or 4.52%, to $10.98 and in after-hours trading lost another 52 cents, or 4.74%.

In its third-quarter filing at the Securities and Exchange Commission on Nov. 13, Akamai did not indicate that any of the issue had been bought back but said it might make repurchases of the notes to reduce interest expense, noting the issue was trading below par.

The company also reported in the 10-Q filing that at Sept. 30 it had a stockholder deficit of $182.6 million and cash and cash equivalents of $99 million.

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