Capital Markets

Symantec Sells $2 Billion of Convertibles

The computer-security company plans to use the proceeds to purchase about $1.5 billion of its common stock.
Stephen TaubJune 12, 2006

In one of the largest such deals in a long while, Symantec is offering $2 billion in convertible notes in a two-part private placement.

The computer-security company will offer $1 billion of convertible senior notes due 2011 and about another $1 billion due 2013. Part of the offering will be bought through Rule 10b5-1 trading plans. The company plans to use the proceeds to purchase about $1.5 billion of its common stock.

According to TheStreet.com, Symantec’s offering is similar to a $5 billion convertible offering by Amgen in February. In that transaction, purchasers of the paper sold short shares back to Amgen in anticipation of the price decline caused by the bond issuance, the website explained.

Symantec also stated that it expects to use a portion of the proceeds to fund convertible-note hedge transactions that it expects to enter into with one or more of the initial purchasers of the notes or their affiliates. The hedges are intended to offset potential dilution of Symantec’s common stock after the future conversion of the notes. In addition, the company expects to enter into separate warrant transactions with one or more of the initial purchasers or their affiliates.

Symantec’s offering is by far the largest convertible deal in recent weeks.

According to Reuters, last week Millipore sold $550 million of 20-year convertible senior bonds in the private placement market; Cubist Pharmaceuticals sold $350 million in convertible subordinated notes due 2013, and Advanced Medical Optics announced plans to privately sell $450 million of 20-year convertible senior subordinated debt.