Cadence Design to price $300 million five-year convertibles to yield 2.375%-2.875%, up 20%-25%

By Rebecca Melvin

New York, June 9 - Cadence Design Systems Inc. plans to price $300 million of five-year convertible senior notes after the market close Wednesday that were talked to yield a coupon of 2.375% to 2.875% with an initial conversion premium of 20% to 25%, according to a market source.

The Rule 144A offering has a greenshoe of up to $50 million.

Morgan Stanley & Co. Inc. and J. P. Morgan Securities Inc. are the joint bookrunners of the offering.

The bonds will be non-callable.

Proceeds will be used to repurchase a portion of the company's outstanding 1.375% convertibles due 2011, to repurchase up to $100 million of its outstanding 1.5% convertibles due 2013, to purchase up to $40 million of common stock and to fund the cost of convertible note hedge transactions.

Cadence intends to enter into convertible note hedge and warrant transactions with one or more of the initial purchasers of the notes or their respective affiliates.

Cadence anticipates that the warrants will have an exercise price that is up to 75% higher than the closing price of Cadence's common stock on the date the warrants are issued.

San Jose, Calif.-based Cadence is an electronic design technology company.

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