Here are details of Bond Offering.
Symbol(s) WIND & Date
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07/23 8:00A (DJ) Wind River Prices $125M Conv Sub Notes Placement >WIND
Story 1306 (WIND, I/SOF, N/BON, N/CVT, N/DJN, N/DJWI, N/REG, M/TEC, P/DCO...)
ALAMEDA, Calif. (Dow Jones)--Wind River Systems Inc. (WIND) priced a $125
million placement of convertible subordinated notes due 2002.
In a press release, Wind River said the notes have a coupon of 5%, and are
convertible to common stock at $48.50 a share.
The 30-day overallotment option is $15 million of additional notes.
Wind River expects the Rule 144 placement to close on or about Aug. 1. The
notes will trade on the Luxembourg Stock Exchange.
Proceeds of the placement will go toward working capital as well as possible
acquisitions and other corporate purposes.
Wind River develops and sells software for embedded Internet,
telecommunications and other applications.
(END) DOW JONES NEWS 07-23-97
08:00 AM
Additional Codes (P/DCS, P/MMA, R/CA, R/NME, R/PRM, R/US, R/USW
I find it interesting that the offering is $25 million more than the last press release with $15 million to satisfy potential over demand.
With a 5% rate WIND will be getting the money on a after tax basis of around 3%. Not a bad deal versus a bank line.
If these bonds are all exercised the increase in shares outstanding would be 2,886,597 shares. Par Value of Bond (assuming it is $1000) divided by the Conversion Price.
The advantages to the convertable bond versus funding expansion with stock are: 1)Lower cost of money to WIND 2) WIND is selling shares now at $48.50 versus $35 to $40 for a secondary IPO. 3) No imediate fear of potential dilution of EPS. WIND will have time to put the money to work before bonds are converted to stock to negate dilution. New capital investment should increase EPS 4)WIND in essence had to issue fewer common shares because the amount of money raised by the Convert was more than they could get by selling equity.
The only disadvantage to WIND that I can see is if the common goes alot higher in the short term than they would have been better off funding expansion with stock. (Ie above $50)
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