Endo Pharmaceuticals to price $345 million seven-year convertibles to yield 1.625%-2.125%, up 15%-20%

By Rebecca Melvin

New York, April 9 - Endo Pharmaceuticals Holdings Inc. plans to price $345 million of seven-year convertibles after the market close on Thursday, according to market sources.

The senior subordinated notes were talked to yield 1.625% to 2.125% with an initial conversion premium of 15% to 20%.

There is an option to sell up to an additional $34.5 million of notes, which are being sold via bookrunner Deutsche Bank.

The notes are non-callable, and they have contingent conversion, subject to a 130% hurdle, as well as full dividend and takeover protection.

Proceeds of the offering will be used to help fund a $750 million share repurchase program, which the company announced Wednesday.

The pace of the share repurchase program will depend on such factors as levels of cash generation, cash requirements for investment in the company's business, repayment of future debt, if any, current stock price and market conditions.

In connection with the convertibles offering, Endo intends to enter into a convertible note hedge transaction aimed at reducing potential dilution upon future conversion of the notes, according to a company release.

Endo also intends to enter into a warrant transaction with the same counterparty as the hedge transaction, which could have a dilutive effect on Endo's earnings per share.

In addition to these transactions, Endo intends to enter into a privately negotiated accelerated share repurchase agreement with the same counterparty, as part of its broader share repurchase program.

The accelerated share repurchase agreement will oblige the counterparty to deliver a specified number of shares of Endo stock to Endo on the day that the note offering closes, the release said.

Subsequently, Endo may receive additional shares from the counterparty depending on the volume-weighted average price of Endo's common stock during a specified averaging period or, in certain limited circumstances, Endo may be required to deliver shares to the counterparty.

Endo intends to use a portion of proceeds from the offering to pay the cost of the convertible note hedge transaction, taking into account the proceeds to Endo from the warrant transaction, and to use the balance of proceeds, together with cash on hand, to repurchase shares.

Endo Pharmaceuticals is a Chadds Ford, Pa.-based specialty drug developer.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.