Parker expects to grant the underwriters an option to purchase up to an additional $10 million aggregate principal amount of Notes solely to cover over-allotments. The Notes will bear interest at a fixed rate and will be convertible, in certain circumstances, into cash and shares, if any, of Parker's common stock.
Parker intends to use the net proceeds from the offering to redeem its entire outstanding senior floating rate notes due 2010 and for general corporate purposes. Additionally, Parker intends to use a portion of the net proceeds to pay the net cost of convertible note hedge and warrant transactions, which is expected to reduce the potential dilution to Parker's common stock from the conversion of the Notes and to have the effect of increasing the conversion price of the Notes.
Parker has been advised by the counter parties to the convertible note hedge and warrant transactions that the counter parties expect to enter into various derivative transactions at and possibly after the pricing of the offering of the Notes and may unwind such derivative transactions, enter into other derivative transactions and purchase and sell Parker's common stock in secondary market transactions following the pricing of the Notes (including during any cash settlement averaging period relating to the Notes).
These derivative transactions could have the effect of increasing, or preventing a decline in, the price of Parker's common stock at or shortly after the pricing of the offering of the Notes. If the counter parties were to unwind various derivatives and/or purchase or sell Parker's common stock in secondary market transactions prior to the maturity of the Notes, such activity could adversely affect the price of Parker's common stock or the settlement amount payable upon conversion of the Notes.
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