An indexed annuity player will be offering $150 million in debt securities.

American Equity Investment Life Holding Company, West Des Moines, Iowa (NYSE:AEL), says the securities will be convertible senior notes due 2015.

The initial purchasers will get an option to buy $50 million in additional notes, the company says.

Under some conditions, holders will be able to convert the notes into common stock, or a combination of cash and stock. American Equity says it will give details about the conversion rate and the conversion price when it prices the offering.

American Equity plans to arrange to hedge the notes, and some of the parties that buy the notes may also hedge the notes, the company says.

If the price of common shares is higher than the warrant strike price, then note transactions could dilute the value of American Equity stock, the company says. But, in some conditions, American Equity may be able to prevent dilution by settling the warrants in cash, the company says.

American Equity plans to use some of the cash it gets from the offering to pay for the hedging arrangements, and it will use the rest to make payments on its credit facility, buy back other convertible notes, and cover general corporate expenses.

-ab