Illumina (ILMN) new issue 02/13/07

325m (+50m) senior cb coming tonight from GS/DB. Terms: 7yr bullet, 1/2-1% up 22 1/2-27 1/2%. dvd/t/o prot. Prcds to buy back $200m stk. Happy Meal. The mkt historically likes human genome cb issues & guys will focus on the patent infringement case, pending March 5th decision as a short term vol catalyst. Co turned EBITDA +ve 4 qtrs ago & FCF +ve 2 qtrs ago, has a strong foot hold in geno typing mkt & has made a significant stk acq in the sequencing mkt w/Solexa. We think rating would be CCC+ & we will use L+400bp, using tighter is a risk given unknown costs associated w/sequence mkt. Listed is in high 40s but illiquid.
We think 40 vol is right for 7yrs. Theory=95.1/97.5/100.1. We like high theo delta but don’t ILuMiNate unless on -> CHEAPS <-

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