OSI Systems has raised $400 million in a private offering of senior unsecured convertible notes due 2031, with an option to issue an additional $60 million within 13 days. The notes accrue interest semi‑annually in arrears and are convertible into common stock under specified circumstances. They are redeemable at OSI’s option after February 6 2029 if the stock price exceeds 130 % of the conversion price for a defined period. The interest rate and conversion price will be set at the time of pricing.
Proceeds will be allocated to a $175 million share‑repurchase program, repayment of a portion of the company’s revolving credit facility, coverage of related fees and expenses, and general corporate purposes. The repurchase program is intended to offset potential dilution from the convertible notes and to return capital to shareholders while strengthening the balance sheet.
The offering follows a July 2024 convertible senior notes issuance of $300 million (with a $41.25 million option) due 2029, which carried a 2.25 % coupon. OSI’s market capitalization is $4.64 billion, and the company reports a record backlog of roughly $1.9 billion and a book‑to‑bill ratio of 1.1×. Operating across security, optoelectronics, and healthcare segments, OSI serves customers in more than 170 countries.
Investors have expressed concerns about the potential dilution that the convertible notes could generate, leading to a muted market reaction. The company’s share‑repurchase plan is designed to mitigate that dilution, but the market remains cautious.
The convertible notes provide OSI with lower immediate interest outlays compared to traditional debt, while preserving flexibility for future equity issuance. The financing also supports debt repayment, reducing leverage and improving the company’s credit profile, and provides liquidity to fund growth initiatives and maintain shareholder value.
Overall, the $400 million convertible senior notes offering is a significant financing event that positions OSI to strengthen its balance sheet, manage capital structure, and continue to support its growth strategy and shareholder returns.
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