By Rebecca Melvin
New York, Aug. 19 - MannKind Corp. priced $100 million of five-year convertible notes after the close of markets on Wednesday at par to yield 5.75% with an initial conversion premium of 22.5%, according to a syndicate source.
Pricing came at the cheap end of talk for the coupon, which was 5.25% to 5.75%, and at the midpoint of talk for the initial conversion premium, which was 20% to 25%.
The Rule 144A deal has an over-allotment option for an additional $10 million of notes, which was reduced from an originally talked $15 million.
Concurrently, MannKind issued an upsized 9 million shares of common stock at $5.55 per share. Originally the stock issue was going to be 8 million shares.
The stock is being loaned to Bank of America Merrill Lynch, which was the bookrunner for the convertible offering. TBC Investment Bank was a co-manager of the deal.
Bank of America Merrill Lynch intends to sell the borrowed shares and use the resulting short position to facilitate short sales and privately negotiated derivative transactions by which the investors can hedge their investment in the notes.
MannKind will receive only a nominal one-time loan fee and no proceeds from the stock offering.
Proceeds of the convertible offering will be used to fund the cost of clinical trial programs and other research and development, to expand its manufacturing operations, both ongoing and planned, and for general corporate purposes, including working capital.
The convertibles will be provisionally callable for life at 150% of the conversion price, with a coupon make-whole for the present value of remaining coupons until maturity.
There are no puts, except for a fundamental change put.
The notes will be settled for stock only, with fractional shares paid in cash. There is dividend and change-of-control protection.
Valencia, Calif.-based MannKind is a biopharmaceutical company that discovers, develops and commercializes therapeutic products for diseases.
| Issuer: | MannKind Corp.
|
| Issue: | Convertible unsecured senior notes
|
| Amount: | $100 million
|
| Greenshoe: | $10 million, reduced from $15 million
|
| Maturity: | Aug. 15, 2015
|
| Concurrent offering: | 9 million of shares as a borrow facility
|
| Bookrunner: | Bank of America Merrill Lynch
|
| Co-manager: | TBC Investment Bank
|
| Coupon: | 5.75%
|
| Price: | Par
|
| Yield: | 5.75%
|
| Conversion premium: | 22.5%
|
| Conversion price: | $6.80
|
| Conversion ratio: | 147.0859 shares
|
| Call protection: | Non-callable
|
| Puts: | No puts
|
| Contingent conversion: | Yes, at 150%
|
| Takeover protection: | Yes
|
| Dividend protection: | Yes
|
| Price talk: | 5.25%-5.75%, up 20%-25%
|
| Pricing date: | Aug. 18
|
| Settlement date: | Aug. 24
|
| Distribution: | Rule 144A
|
| Stock symbol: | Nasdaq: MNKD
|
| Stock reference price: | $5.55
|
| Market capitalization: | $679 million
|
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