National Financial Partners Corp. (NYSE:NFP), a financial services distributor, is raising $125 million by selling notes to institutional investors.

The convertible senior notes will pay a rate of 4% and are due in 2017, according to NFP, New York.

The conversion rate is 77.6714 shares of common stock per $1,000 principal amount of notes, which is equivalent to a conversion price of about $12.87 per share, subject to adjustment, the company says.

The sale of the notes is set to close Tuesday.

The initial purchasers of the notes will have a 30-day option to buy up to an additional $15 million in convertible notes, NFP says.

NFP also is in the process of setting up a new credit facility.

NFP plans to use some of the offering proceeds and credit facility funds to buy back 0.75% convertible senior notes due 2012. NFP also will use offering proceeds to pay to hedge its notes, and it may use some to pay down an existing credit facility and for general corporate purposes, the company says.