By Rebecca Melvin
New York, Nov. 11 – Aceto Corp. priced $125 million of five-year convertible senior notes after the market close on Tuesday at par to yield 2% with an initial conversion premium of 30%, according to a term sheet.
Pricing of the Rule 144A deal came at the midpoint of talk, which was for a 1.75% to 2.25% coupon and 27.5% to 32.5% premium.
Wells Fargo Securities LLC and J.P. Morgan Securities LLC were joint bookrunners of the offering.
There is an over-allotment option for up to $18.75 million of additional notes.
The notes are non-callable with no puts. There is standard takeover protection and dividend protection for dividends above $0.06 per share per quarter.
The notes will be convertible into cash, common shares or a combination of cash and shares.
In connection with the pricing of the notes, Aceto entered into convertible note hedge and warrant transactions, or a call spread, which boosts the premium from the issuer’s perspective.
Of proceeds, about $77.3 million will be used to pay back debt under the company’s existing credit facilities and about $11.7 million will be used to pay the net cost of the call spread. Remaining proceeds will be used for general corporate purposes, which may include funding research, development and product manufacturing, acquisitions or investments, and for increasing working capital and funding capital expenditures.
Aceto is a Port Washington, N.Y., marketer and distributor of pharmaceutical ingredients.
| Issuer: | Aceto Corp.
|
| Issue: | Convertible senior notes
|
| Amount: | $125 million
|
| Greenshoe: | $18.75 million
|
| Maturity: | Nov. 1, 2020
|
| Bookrunners: | Wells Fargo Securities LLC, J.P. Morgan Securities LLC
|
| Senior co-manager: | Citigroup Global Markets Inc.
|
| Co-manager: | Craig-Hallum Capital Group LLC
|
| Coupon: | 2%
|
| Price: | Par
|
| Yield: | 2%
|
| Conversion premium: | 30%
|
| Conversion price: | $33.21
|
| Conversion ratio: | 30.1069 shares
|
| Net share settlement: | Yes
|
| Calls: | Non-callable
|
| Puts: | No puts
|
| Takeover protection: | Yes, standard
|
| Dividend protection: | Yes, for dividends above $0.06 per share
|
| Call spread: | Yes
|
| Price talk: | 1.75%-2.25%, up 27.5%-32.5%
|
| Pricing date: | Nov. 10
|
| Settlement date: | Nov. 16
|
| Stock symbol: | Nasdaq: ACET
|
| Stock closing price: | $25.55 at close Nov. 10
|
| Distribution: | Rule 144A
|
| Market capitalization: | $737.9 million
|
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