Convertible Deals Sink Three Stocks After Hours

Three companies in three different industries said after the close Tuesday that they're planning convertible offerings, but the result was the same for each, as all sold off in extended trading.

Mesa Air Group ( MESA) proposed selling $75 million of convertible notes due in 2023 to qualified institutional buyers. The company plans to use the net proceeds from the offering for general corporate purposes and to fund obligations related to future regional jet deliveries.

Separately, Guilford Pharmaceuticals ( GLFD) said it plans to raise about $50 million through an offering of five-year subordinated notes that will be convertible into common shares.

The company might raise up to $7.5 million more if an option granted to the notes' initial purchasers is exercised. Guilford expects to use up to $10 million of the proceeds to repurchase common stock that's been sold short by certain purchasers of the notes. The rest of the proceeds will go toward general corporate purposes, the pharmaceutical company said.

Meanwhile, Tekelec ( TKLC), a developer of telecommunications signaling applications, wants to sell $125 million of senior subordinated convertible notes due 2008 to institutional buyers.

The company will grant the initial purchaser an option to buy an additional $25 million of the notes. Tekelec will use the proceeds to redeem the 3.25% convertible subordinated discount notes due 2004, which were issued in November 1999.

Tekelec also said it closed the acquisition of a controlling interest in Santera Systems, a deal that will lower its earnings in the second half of this year and again in 2004.

Volume wasn't especially heavy in any of the three issues after the regular session ended, but traders were sending all of them lower on Instinet. Mesa was losing 75 cents, or 11%, to $6.10. Guilford was off 38 cents, or 7%, to $5.20, and Tekelec was down 65 cents, or 5%, at $12.40.

Investors often react by selling shares of companies that plan convertible offerings, because the conversion of debt into common stock will dilute future earnings.

More from Technology

Facebook Takes Aim at YouTube, But It'll Be an Uphill Online Battle

Facebook Takes Aim at YouTube, But It'll Be an Uphill Online Battle

Microsoft Chief Says Its ICE Contract Isn't Part of Child Separation Policy

Microsoft Chief Says Its ICE Contract Isn't Part of Child Separation Policy

Immigration, Instagram and Oil - Here's What You Can't Miss Wednesday

Immigration, Instagram and Oil - Here's What You Can't Miss Wednesday

What Will GM Do With Cruise -- and Is Its Stock Worth $55?

What Will GM Do With Cruise -- and Is Its Stock Worth $55?

3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio

3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio