DexCom talks $850 million convertibles due November 2025 to yield 0.125%-0.625%, up 40%-45%

By Abigail W. Adams

Portland, Me., May 11 – DexCom Inc. plan to price $850 million of convertible notes due November 2025 after the market close on Monday with price talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 40% to 45%, according to a market source.

J.P. Morgan Securities LLC, BofA Securities Inc., SVB Leerink LLC and Goldman Sachs & Co. LLC are joint bookrunners for the Rule 144A offering, which carries a greenshoe of $150 million.

The notes are non-callable until May 20, 2023 and then subject to a 130% hurdle with a make-whole.

They are contingently convertible until Aug. 15, 2025.

There is dividend protection. The notes are putable upon a fundamental change.

The notes will be settled in cash, shares or a combination of both at the company’s option.

DexCom intends to use up to $600 million of net proceeds to repurchase up to $260 million of its outstanding 0.75% convertible notes due 2022 in individually negotiated transactions and to repurchase shares of common stock from purchasers of the convertible notes at a price equal to the stock reference price.

Remaining proceeds will be used for capital expenditures, working capital and general corporate purposes, which may include in-licensing, acquisitions or investments in other businesses, products or technologies, or additional note and share repurchases.

DexCom is a San Diego-based developer, manufacturer and distributor of glucose monitoring systems for diabetes management.

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