Albany Molecular greenshoe lifts 2.25% convertibles to $150 million

By Marisa Wong

Madison, Wis., Dec. 4 - The underwriters of Albany Molecular Research Inc.'s recent offering of 2.25% five-year convertible senior notes exercised in full their $20 million over-allotment option. The additional notes settled on Wednesday, according to an 8-K filing with the Securities and Exchange Commission.

Albany Molecular priced an upsized $130 million of the convertibles after the market close on Nov. 19 at par to yield 2.25% with an initial conversion premium of 32%, as previously reported.

The Rule 144A deal was initially expected to be $100 million in size, and pricing came at the midpoint of 2% to 2.5% coupon talk and toward the rich end of 27.5% to 32.5% premium talk.

The $20 million greenshoe was upsized from $15 million.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the joint bookrunners.

The non-callable notes will be convertible at the option of the holders in certain circumstances and solely into cash.

In connection with the pricing of the notes, Albany Molecular entered into privately negotiated cash convertible note hedge transactions with JPMorgan Chase Bank, NA, London Branch and Morgan Stanley & Co. International plc. The initial strike price of the cash convertible note hedge transactions is $18.944, which boosts the initial conversion premium from the issuer's perspective to 60%.

The cash convertible note hedge transactions are expected to offset cash payments due upon conversion of the notes in excess of the principal amount, as noted before.

A portion of the proceeds will be used to pay the cost of the cash convertible note hedge transactions. Remaining proceeds will be used for working capital and other general corporate purposes, which may include acquisitions of, or investments in, complementary businesses, products, services, technologies and capital expenditures.

Albany, N.Y.-based Albany Molecular is a drug discovery services and manufacturing company.

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