Notes convertible at $0.75 per share; warrants exercisable at $1.50
By Marisa Wong
Morgantown, W.Va., March 15 – Orexigen Therapeutics, Inc. entered into a securities purchase agreement on Tuesday to sell $165 million of 0% convertible senior secured notes due 2020 and warrants to purchase up to 220 million shares of common stock and 220,000 shares of preferred stock to qualified institutional buyers and accredited investors.
The offering is being led by funds managed by Baupost Group, LLC, a holder of about 18.1% of the company’s outstanding common stock, according to an 8-K filing with the Securities and Exchange Commission.
Leerink Partners LLC is the placement agent.
The notes, warrants and shares will be sold at par.
The conversion rate will be roughly 1,333.33 shares of common stock for each $1,000 principal amount of notes, which represents an initial conversion price of $0.75 per share. The conversion price is a 7.1% premium to the March 14 closing share price.
Under some circumstances, the notes may be putable. However, the notes are not callable unless shareholders and at least 70% of the noteholders approve or consent to the redemption.
The 10-year warrants are exercisable at $1.50. The strike price is a 114.3% premium to the March 14 closing share price.
The offering is expected to close on March 21.
Starting six months after closing, conversions will be settled in cash until stockholder approval is obtained for the transaction and to issue the necessary shares.
Also, if shareholder approval is not obtained within six months of closing the notes will pay interest at a rate of 8% and the conversion rate will be increased by 20% until approval is obtained.
Following approval, the notes will only be convertible into stock.
The company intends to use proceeds for general corporate purposes, including development and commercialization activities, clinical trials and working capital.
| Issuer: | Orexigen Therapeutics, Inc.
|
| Issue: | Convertible senior secured notes, warrants
|
| Amount: | $165 million
|
| Maturity: | 2020
|
| Price: | Par
|
| Conversion price: | $0.75
|
| Warrants: | For up to 220 million shares of common stock and 220,000 shares of preferred stock
|
| Warrant expiration: | 10 years
|
| Warrant strike price: | $1.50
|
| Placement agent: | Leerink Partners LLC
|
| Investor: | Baupost Group, LLC (lead)
|
| Pricing date: | March 15
|
| Settlement date: | March 21
|
| Stock symbol: | Nasdaq: OREX
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| Stock price: | $0.70 at close March 14
|
| Market capitalization: | $93.19 million
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