Powerwave Technologies Inc. (PWAV), the maker of wireless communications equipment for Nokia Siemens Networks and Alcatel-Lucent, fell 5.5 percent in Nasdaq trading after selling $130 million in convertible notes.
The notes pay 3.875 percent interest and can be exchanged for common shares in 20 years at a conversion price of $8.71, Santa Ana, California-based Powerwave said today in a statement. The purchaser also exercised an option to buy another $20 million of the notes, Powerwave said.
Creating additional shares through the notes may dilute investors' existing holdings. Powerwave, which has reported four straight quarters of losses, said it will use the proceeds for working capital and to repay existing debt.
``Often you have people buying the bond and selling the stock,'' said Lawrence Harris, an analyst with Oppenheimer & Co. in New York. He rates the stock ``neutral'' and doesn't own any. ``It's not unusual.''
The company said it may repurchase existing convertible notes that pay 1.25 percent interest and come due next year.
Powerwave declined 37 cents to $6.33 at 4 p.m. New York time on the Nasdaq Stock Market. The drop was the largest since Aug. 10. Powerwave has fallen 1.9 percent this year.
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