MannKind to issue $161 million seven-year convertibles to yield 7%

By Rebecca Melvin

New York, Jan. 31 - MannKind Corp. said it plans to sell $161 million of secured convertible notes due 2019 that will yield 7% and that will be convertible at an initial conversion price of $3 per share, according to a regulatory filing.

The notes, to be sold under Rule 144A, will be secured by a first-priority lien on substantially all of the company's assets, excluding its insulin inventory and subject to other exclusions.

The deal was seen pricing ahead of the market open on Thursday, according to a market source.

Concurrently, the Valencia, Calif.-based biopharmaceutical company plans to raise $50 million through a registered public offering of units, with each unit consisting of one share of MannKind common stock and a warrant to purchase 0.6 of a share of MannKind stock. MannKind plans to grant underwriters an over-allotment of units.

Jefferies & Co Inc., Piper Jaffray & Co and Cowen and Co. LLC are acting as joint bookrunners of the offerings.

MannKind also said it planned to issue to the Mann Group LLC, which is controlled by MannKind's chief executive Alfred E. Mann, restricted shares of common stock in exchange for cancellation of outstanding debt.

The offerings are being conducted as separate transactions and are not contingent upon each other.

The convertible notes are non-callable and have an investor put on Feb. 15, 2015.

Net proceeds from the notes will be used to repay or repurchase MannKind's 3.75% convertible notes due 2013 in privately negotiated transactions, and for general corporate purposes, including research and development expenses, capital expenditures, working capital and general administrative expenses.

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