* Reaffirms Q3 revenue, gross-margin outlook

* Sees incremental cash consumption of about $4 mln in Q3

* Shares down 10 pct

July 8 (Reuters) - Semiconductor testing company Verigy Ltd (VRGY.O: Quote, Profile, Research) said it plans to offer $110 million of convertible senior notes due 2014, sending its shares down 10 percent.

The company also reaffirmed its third-quarter revenue and gross-margin outlook.

Verigy expects to use the net proceeds from the offering for general corporate purposes, which could include financing potential acquisitions.

The company said it would incur incremental cash consumption of about $4 million in the third quarter as a result of its acquisition of Touchdown Technologies.

Verigy still expects third-quarter revenue to increase 10 percent to 25 percent from the $71 million reported for the second quarter.

It also expects gross margins to improve from two to five percentage points from the 31 percent level in the second quarter.

Shares of the company were trading at $10.15 after the bell. They closed at $11.25 Wednesday on Nasdaq. (Reporting by Deepti Govind in Bangalore; Editing by Vinu Pilakkott)