By Kenneth Lim
Boston, June 1 - Cubist Pharmaceuticals Inc. on Tuesday priced an upsized $325 million offering of seven-year convertible subordinated notes at the rich end of talk, at a coupon of 2.25% and an initial conversion premium of 30%.
The convertibles were offered at par and were priced after the market closed. Price talk guided for a coupon of 2.25% to 2.75% and an initial conversion premium of 25% to 30%. The size of the deal was originally $275 million with an over-allotment option for a further $41.25 million. The greenshoe is now $25 million.
Goldman Sachs was the bookrunner of the registered off-the-shelf deal.
The initial conversion price is $30.77 per share, or an initial conversion ratio of 32.4981 shares per note. Cubist stock closed at $23.67 on Tuesday.
The convertibles are non-callable for the first five years, and callable after that if Cubist stock exceeds 150% of the conversion price. There are no put options.
There will be standard dividend and takeover protection.
Cubist, a Lexington, Mass.-based biopharmaceutical company, said it will use the proceeds of the deal to redeem its outstanding $165 million of 5.5% convertibles due 2008. Any remaining proceeds will be used to market Cubist's intravenous antibiotic drug Cubicin, to build the company's product pipeline and for working capital.
| Issuer: | Cubist Pharmaceuticals Inc.
|
| Issue: | Convertible subordinated notes
|
| Bookrunner: | Goldman Sachs
|
| Amount: | $325 million
|
| Greenshoe: | $25 million
|
| Maturity: | June 15, 2013
|
| Coupon: | 2.25%
|
| Price: | Par
|
| Yield: | 2.25%
|
| Conversion premium: | 30%
|
| Conversion price: | $30.77
|
| Conversion ratio: | 32.4981
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Call protection: | Non-callable five years, thereafter callable subject to 150% threshold
|
| Puts: | None
|
| Price talk: | 2.25%-2.75%, up 25%-30%
|
| Pricing date: | May 31
|
| Settlement date: | June 6
|
| Distribution: | Registered
|
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