Agricultural equipment distributor AGCO ( AG - Get Report) said Tuesday that it priced its senior subordinated notes offering of $175 million.

The Duluth, Ga.-based company said that the notes will pay interest semiannually at a rate of 1.25% per year and will mature on Dec. 15, 2036. The notes will be convertible based on an initial conversion rate of 24.5525 shares of AGCO's common stock per $1,000 principal amount of notes. This is equivalent to an initial conversion price of about $40.73 a share.

The company added that it has granted the underwriters a 30-day option to purchase up to an additional $26.25 million to cover over-allotments.

AGCO estimates net proceeds from the offering at about $170.6 million, after deducting underwriting discounts and estimated expenses of the offering and intends to use it to repay a portion of the term loans outstanding under its existing bank credit facility.

The offering is expected to close on Dec. 4.

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