Medicis $350 million convertibles talked at 2.5-3.0% yield, up 20-25%

By Ronda Fears

Nashville, Tenn., May 28 - Medicis launched $350 million of 30-year convertible senior notes talked to yield 2.5% to 3.0% with a 20% to 25% initial conversion premium. The Rule 144A deal, which is being sold on swap, is set to price after the close Thursday via lead manager Deutsche Bank Securities Inc.

Convertible analysts said at the midopint of price talk the issue is about 6.5% cheap, assuming a credit spread of about 450 basis points over Treasuries and 30% volatility in the stock. Using a spread of 500 basis points and 31% volatility, analysts put it 2.17% cheap.

The notes will be non-callable for five years and there are put options in years five, 10 and 15.

There is a contingent conversion trigger of 110% and contingent interest payment trigger of 110%.

The Scottsdale, Ariz.-based specialty pharmaceutical company, which focuses on dermatology treatments and pediatric conditions, plans to use proceeds first to buyback $125 million of common stock sold short by purchasers of the convertible.

Remaining proceeds of around $161 million are earmarked for future acquisitions and general corporate purposes.

The issue is expected to be rated BB- or B+.

© 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.