Human Genome announces dates for make-whole conversion period, put

By Susanna Moon

Chicago, Aug. 3 - Human Genome Sciences, Inc. holders who convert their 3% convertible senior notes due 2018 will receive a bump in the conversion rate during a make-whole period.

The temporary bump began July 30 and will run to 5 p.m. ET on Sept. 5, according to a press release by Human Genome.

As noted on Aug. 1, the 3% convertibles are putable due to a change of control, and their conversion ratio was adjusted.

GlaxoSmithKline plc acquired all outstanding shares of Human Genome for $14.25 per share in cash through a tender offer and subsequent merger, which constituted a make-whole fundamental change requiring the conversion rate bump.

As previously reported, GlaxoSmithKline purchased about 83% of the company's shares through a tender offer on July 30, paying $14.25 per share, or about $2.26 billion in total. And a subsequent offer for the remaining untendered shares ended at 5 p.m. ET on Aug. 2.

After the make-whole period, the notes will be convertible only under certain conditions, and the conversion price will be $1,069.418325 in cash per $1,000 principal amount of notes.

The make-whole fundamental change triggered an increase in the conversion rate to 87.1211 shares per $1,000 principal amount.

The company previously said that any conversions of the 3% convertibles or its 2.25% convertible subordinated notes due Aug. 15, 2012 made prior to the merger will be settled in cash.

Once the merger is completed, the notes will become convertible into the cash amount that the holders would have been entitled to receive had they converted their notes immediately prior to the merger. As a result, holders who convert after the merger but prior to the completion of the make-whole conversion period will receive $1,241.475675 per $1,000 principal amount of 3% notes or $801.28 per $1,000 principal amount of 2.25% notes.

Put option

As a result of the fundamental change, the 3% notes also are putable at par plus accrued interest up to but excluding the repurchase date of Sept. 6.

Holders may exercise their put option until 5 p.m. ET on Sept. 4.

The total put price will be about $1,009.25 per $1,000 principal amount, including accrued interest of about $9.25.

Human Genome said that because the purchase price for the put option is lower than the amount of cash payable upon conversion of the notes, it does not expect holders to participate in the offer.

Bank of New York Mellon Corp. (attn: William Buckley) is the trustee, paying agent and conversion agent.

Human Genome is a biopharmaceutical company based in Rockville, Md. GlaxoSmithKline is a health-care and pharmaceutical company based in Brentford, England.

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