Volcano Corporation To Offer $350 Million Convertible Senior Notes Due 2017

SAN DIEGO, Dec. 3, 2012 /PRNewswire/ -- Volcano Corporation (NASDAQ: VOLC) today announced its intention to offer, subject to market and other conditions, $350 million principal amount of convertible senior notes due December 1, 2017 in an offering registered under the Securities Act of 1933, as amended. Prior to August 7, 2017, the notes will be convertible only upon certain circumstances and during certain periods. Upon conversion, holders will receive up to the principal amount of the notes in cash and any excess conversion value in shares of Volcano's common stock. Volcano also expects to grant the underwriters of the offering an option to purchase up to $52.5 million aggregate principal amount of additional notes to cover over-allotments.

The notes will be general senior unsecured obligations of Volcano and will pay interest semi-annually. The interest rate, conversion rate, offering price and other terms will be determined at the time of pricing of the offering. Volcano expects to use a portion of the net proceeds of the offering of the notes to pay the costs of the convertible note hedge transactions described below, taking into account the proceeds of the warrant transactions described below, and may use up to approximately $50.0 million of the net proceeds from the offering to fund repurchases of its outstanding 2.875% Convertible Senior Notes due 2015 (the "2015 Notes"). Volcano may also use a portion of the net proceeds to invest in or acquire complementary products, businesses or technologies.  The remaining net proceeds are intended for working capital and general corporate purposes.

In connection with any repurchases of Volcano's outstanding 2015 Notes, Volcano expects to terminate the convertible note hedge transactions and warrant transactions it entered into at the time of the offering of the 2015 Notes in an amount corresponding to the portion of the 2015 Notes so repurchased, and Volcano expects to receive from its counterparty to these transactions a net payment resulting from such partial termination, the amount of which will depend on many factors, including, without limitation, the market price of Volcano's common stock and overall market conditions at the time these transactions are partially terminated. Volcano has been advised by its counterparty to these transactions that it or its affiliate does not expect to unwind its existing hedge positions with respect to these transactions and will instead use these existing hedge positions in connection with establishing its initial hedge positions with respect to the convertible note hedge transactions and warrant transactions entered into in connection with this offering of notes.

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