New York, March 31 – Anacor Pharmaceuticals Inc. priced a $250 million offering of seven-year convertibles after the market close on Thursday to yield 2% with a 32.5% initial conversion.
The deal came at the mid-point of talk, which had been set at a yield of 1.75% to 2.25% and an initial conversion premium of 30% to 35%.
The Rule 144A deal was sold via bookrunners Goldman Sachs & Co. and Citigroup Global Markets Inc.
There is a greenshoe for $37.5 million of additional notes.
The notes are non-callable for life and have no puts.
In connection with the pricing of the notes, Anacor will enter into capped call transactions with one or more financial institutions that will raise the effective conversion premium from Anacor’s perspective to 50%. The capped call transactions will reduce the potential dilution to Anacor’s common stock and offset cash payments that Anacor will be required to make in excess of the principal amount.
Proceeds from the offering will be used to fund the net cost of the capped call transactions and for general corporate purposes.
The notes have full dividend protection and protection for investors upon a change of control.
Anacor is a Palo Alto, Calif.-based biopharmaceutical company.
| Issuer: | Anacor Pharmaceuticals Inc.
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| Issue: | Convertible senior notes
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| Amount: | $250 million
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| Greenshoe: | $37.5 million
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| Maturity: | April 15, 2023
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| Coupon: | 2%
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| Conversion premium: | 32.5%
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| Conversion price: | $70.82
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| Conversion ratio: | 14.1201
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| Contingent conversion: | Yes
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| Net share settlement: | Yes
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| Call: | Non-callable
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| Pricing date: | March 31, after close
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| Settlement date: | April 6
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| Bookrunner: | Goldman Sachs & Co. and Citigroup Global Markets Inc.
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| Lead manager: | Cowen and Co.
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| Co-managers: | Wedbush Securities Inc. and JMP Securities LLC
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| Distribution: | Rule 144A
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| Hedging: | Capped call at $80.18, effective conversion premium of 50%
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| Stock price: | $53.45 at close on March 31
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| Stock symbol: | Nasdaq: ANAC
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| Market capitalization: | $2.63 billion
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