Halozyme plans $400 million offering of five-year convertibles to yield 1%-1.5%, up 35%-40%

By Rebecca Melvin

New York, Nov. 12 – Halozyme Therapeutics Inc. plans to price $400 million of five-year convertible notes, which were being talked to yield 1% to 1.5% with an initial conversion premium of 35% to 40%, according to market sources on Tuesday.

The Rule 144A deal has a $60 million greenshoe and was being sold via joint bookrunners BofA Securities Inc. and Evercore, with Cantor Fitzgerald as co-manager.

The deal was expected to price after the market close on Wednesday.

The notes are non-callable for three years and then provisionally callable at a price trigger of 130%. There are no puts. They have contingent conversion at a trigger of 130%.

The net-share settled notes have takeover protection via a make-whole adjustment premium delivered upon conversion as incremental shares; and there is full dividend protection via conversion ratio adjustment.

Up to $200 million of the net proceeds from the offering are expected to be used to repurchase shares of the company’s common stock concurrently with, or shortly after, the pricing of the notes. Remaining proceeds are earmarked for general corporate purposes, including share repurchases subsequent to the offering, working capital and retirement of existing debt obligations under the company’s loan agreement with Oxford Finance and Silicon Valley Bank.

San Diego-based Halozyme is a biotechnology company developing products for diabetes, cancer, dermatology and drug delivery markets.

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