Gilead talks $1.1 billion convertibles; 5 years at 0-0.5%, up 20-25%; 7 years at 0.125-0.625%, up 19-24%

By Kenneth Lim

Boston, April 18 - Gilead Sciences Inc. is planning two $550 million tranches of cash-pay convertible notes with the five-year paper talked at a coupon of 0% to 0.5% and an initial conversion premium of 20% to 25%, and the seven-year tranche talked at a coupon of 0.125% to 0.625% and an initial conversion premium of 19% to 24%.

All the convertibles will be offered at par, and pricing is expected Wednesday after the market closes.

Each tranche has an over-allotment option of a further $100 million, bringing the total deal size to $1.1 billion with greenshoe options worth $200 million.

Gilead will also enter into convertible note hedge and warrant transactions to increase the effective premium of the deal.

Morgan Stanley, Merrill Lynch & Co. and Banc of America Securities are the bookrunners.

The deals are offered under Rule 144A with registration rights.

Both sets of convertibles will be non-callable for life with no puts. They will each have a 130% contingent conversion provision.

The conversion rate will be adjusted for dividend payments, and there is a change-of-control put with a premium make-whole.

The convertibles have net share settlement.

Gilead, a Foster City, Calif.-based biopharmaceutical company, said it will use the proceeds of the deal to buy back about $500 million of its stock and to fund the convertible note hedge transactions. Remaining proceeds will be used for general corporate purposes.

Gilead stock closed at $61.84 on Tuesday on Nasdaq.

© 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.