Intl Game Tech Announces $500M Cvt Note Offering

International Game Technology (NYSE: IGT - News) today announced its intention to offer, subject to market and other conditions, $500 million aggregate principal amount of its Convertible Notes due 2014 (the "Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. IGT expects to grant the initial purchasers of its Notes an option to purchase up to $75 million principal amount of additional Notes, solely to cover over-allotments.
The Notes will be general unsecured senior obligations of IGT and will bear cash interest at a fixed rate, to be payable semiannually. Upon the occurrence of certain specified circumstances, the Notes will be convertible at the option of the holders into cash up to the principal amount thereof, and, if applicable, shares of IGT common stock in excess of the principal amount. The Notes will not be redeemable at the option of IGT before the maturity date, except in certain circumstances relating to applicable gaming authority regulations. Holders of the Notes will have the option to require IGT to repurchase their Notes at 100% of their principal, plus any accrued interest, subject to certain conditions, upon the occurrence of certain events constituting a "Fundamental Change." The interest rate, conversion rate and other terms of the Notes will be determined by negotiations between IGT and the initial purchasers.
IGT, in order potentially to reduce the dilution from conversion of the Notes, intends to use a portion of the net proceeds of the offering to enter into one or more hedging transactions on its common stock with one or more of the initial purchasers and/or their respective affiliates (the "hedge counterparties"). Holders of the Notes will not have any rights with respect to any hedging transactions entered into by IGT. IGT also expects to enter into separate warrant transactions with the hedge counterparties, which would result in additional proceeds to IGT.
IGT intends to use the remaining proceeds from the offering to pay down outstanding revolving indebtedness under its senior credit facility.