By Rebecca Melvin
New York, Sept. 5 - Cubist Pharmaceuticals Inc. priced an upsized $700 million of convertible senior unsecured notes in five- and seven-year tranches that came at the tight end of revised price talk, a syndicate source said.
Tranche A, which matures in 2018, was for $300 million, which was unchanged from the initially talked deal size, and priced with a 1.125% coupon. Talk was tightened during marketing to 1.125% to 1.625% from 1.625% to 2.125%.
Tranche B, which matures in 2020, was upsized to $400 million from $300 million and came at a 1.875% coupon, which was the tight end of the 1.875% to 2.125% range, which was tightened from 2.125% to 2.625%.
Both tranches have an initial conversion premium of 32.5%, which was the tight end of initial 27.5% to 32.5% talk.
Both tranches have a $50 million greenshoe, and will be non-callable.
Joint bookrunners were Morgan Stanley & Co. LLC, Barclays and RBC Capital Markets LLC.
In connection with the deal, the company entered into convertible note hedge and warrant transactions with initial purchasers of the bonds. The call spread raised the initial conversion premium from the issuer's perspective to 55%.
Proceeds will be used primarily to fund the company's previously announced acquisition of Optimer Pharmaceuticals Inc. and to pay the $51 million net cost of the call spread. Remaining proceeds will be for general corporate purposes.
Cubist is a Lexington, Mass.-based biopharmaceutical company.
| Issuer: | Cubist Pharmaceuticals Inc.
|
| Issue: | Convertible senior notes
|
| Bookrunners: | Morgan Stanley & Co. LLC, Barclays, RBC Capital Markets LLC
|
| Conversion premium: | 32.5%
|
| Conversion price: | $82.43
|
| Conversion ratio: | 12.1318
|
| Call protection: | Non-callable
|
| Puts: | No puts
|
| Call spread: | Yes, raises premium from issuer's perspective to 55%
|
| Takeover protection: | Yes
|
| Dividend protection: | Yes
|
| Contingent conversion: | Yes, at 130%
|
| Pricing date: | Sept. 4
|
| Settlement date: | Sept. 10
|
| Stock reference price: | $62.21 at close Sept. 4
|
| Distribution: | Rule 144A
|
| Market capitalization: | $4.1 billion
|
|
|
| 2018 notes
|
| Amount: | $300 million
|
| Greenshoe: | $50 million
|
| Maturity: | Sept. 1, 2018
|
| Coupon: | 1.125%
|
| Price: | Par
|
| Yield: | 1.125%
|
| Price talk: | 1.125%-1.625%, up 32.5%, tightened from 1.625%-2.125%, up 27.5%-32.5%
|
|
|
| 2020 notes
|
| Amount: | $400 million, upsized from $300 million
|
| Greenshoe: | $50 million
|
| Maturity: | Sept. 1, 2020
|
| Coupon: | 1.875%
|
| Price: | Par
|
| Yield: | 1.875%
|
| Price talk: | 1.875%-2.125%, up 32.5%, tightened from 2.125%-2.625%, up 27.5%-32.5%
|
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