AMAG Pharmaceuticals plans $150 million five-year convertibles to yield 2.25%-2.75%, up 30%-35%

By Rebecca Melvin

New York, Feb. 10 - AMAG Pharmaceuticals Inc. launched a $150 million offering of five-year convertibles after the market close Monday that it planned to price after a 24-hour marketing period to yield 2.25% to 2.75% with an initial conversion premium of 30% to 35%, according to market sources.

The registered, off-the-shelf deal has an over-allotment option for up to $22.5 million and was being sold via J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC acting as joint bookrunning managers.

The notes are non-callable and have net share settlement and contingent conversion if shares exceed 130% of the conversion price.

In connection with the offering, the company plans to enter into privately negotiated convertible note hedge and warrant transactions, or a call spread, which boosts the initial conversion premium from the issuer's perspective.

A portion of the proceeds will be used to pay the net cost of the call spread, with remaining proceeds for working capital and other general corporate purposes, including to fund possible acquisitions or investments in complementary businesses, services or technologies.

Lexington, Mass.-based AMAG is a specialty pharmaceutical company.

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