Spectrum Pharmaceuticals offers $100 million five-year convertibles at 2.25%-2.75%, up 27.5%-32.5%

By Rebecca Melvin

New York, Dec. 16 - Spectrum Pharmaceuticals Inc. launched an offering of $100 million of five-year convertibles after the market close Monday that was talked to yield 2.25% to 2.75% with an initial conversion premium of 27.5% to 32.5%, according to a market source.

The Rule 144A convertible deal, which has a $20 million over-allotment option, was expected to price after the market close on Tuesday and was being sold via Jefferies LLC and RBC Capital Markets LLC as joint bookrunners, with co-managers HC Wainwright and JMP Securities.

The notes have contingent conversion and will be settled in shares unless shareholder approval is obtained for net share settlement. The securities are also non-callable, with dividend and takeover protection.

In connection with the offering, the company plans to enter into convertible note hedge and warrant transactions with market players that may include initial purchasers of the bonds.

The net cost of the call spread will be paid for with proceeds. Remaining proceeds will be used for general corporate purposes, which may include working capital, research and development, clinical studies and business development.

Irvine, Calif.-based Spectrum develops cancer drugs.

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