Medicis plans $400 million five-year convertible notes to yield 1.5%-2%, up 20%-25%

By Rebecca Melvin

New York, May 10 - Medicis Pharmaceutical Corp. launched $400 million of five-year convertible senior notes ahead of the market open on Thursday with pricing set for after the close.

The registered, off-the-shelf deal was talked to yield 1.5% to 2% and with a 20% to 25% initial conversion premium, according to a market source.

Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC are the joint bookrunners for the offering, which has a $50 million greenshoe.

The notes are non-callable with no puts.

There is net share settlement and dividend protection via conversion rate adjustment.

Proceeds are intended for general corporate purposes, which may include working capital, capital expenditures, repurchasing shares of common stock, repaying outstanding debt and corporate acquisitions.

In addition the company intends to enter into convertible note hedge and warrant transactions, and a portion of proceeds from the note and warrant sales will be used to fund the hedge transactions.

Scottsdale, Ariz.-based Medicis is a specialty pharmaceutical company focused on dermatology treatments.

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