By Abigail W. Adams
Portland, Me., Nov. 8 – Insulet Corp. priced an upsized $350 million of seven-year convertible senior notes to yield 1.375% with an initial conversion premium of 30% late Tuesday.
Pricing came at the rich end of talk for both the coupon and the conversion premium, a market source said. Price talk for the deal, initially sized at $300 million, was for a 1.375% to 1.875% yield with an initial conversion premium of 25% to 30%.
Morgan Stanley and Wells Fargo Securities are joint bookrunners for the for the Rule 144A notes.
The deal size and greenshoe, which increased to $52.5 million from $45 million, were upsized due to strong market demand.
“It was oversubscribed multiple times,” a market source said.
The 1.375% notes due Nov. 15 2024 were trading between 101 and 102 shortly after the market open Wednesday.
The notes are non-callable for four years, and then provisionally callable if the shares trade above 130% of the conversion price. There is no call spread attached to the deal, a market source said.
There is a contingent conversion provision.
Insulet anticipates net proceeds of $340.2 million, or $391.4 million if the greenshoe is exercised, from the deal, according to a company release. The company plans to use $99 million of the proceeds to repurchase $63.4 million of the company’s outstanding 2% convertible notes due 2019.
The repurchase of the 2% notes will close concurrently with the new issue on Nov. 10, according to a company release. The 2% notes closed at 155.3 on Tuesday, according to Trace data.
Remaining proceeds will be used for general corporate purposes, which may include financing additional repurchases, redemptions, and/or the settlement of conversions of Insulet’s 2% convertible senior notes due 2019 and investments in the company’s manufacturing operations and international expansion.
Insulet is a Billerica, Mass-based medical device company and owner of the proprietary Omnipod Insulin Management System.
| Issuer: | Insulet Corp.
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| Securities: | Convertible senior notes
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| Amount: | $350 million
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| Greenshoe: | $52.5 million
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| Maturity: | Nov. 15, 2024
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| Coupon: | 1.375%
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| Price: | 100
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| Conversion premium: | 30%
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| Conversion price: | $93.18
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| Conversion rate: | 10.7315
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| Call options: | Non-callable for four years, then provisionally callable if stock trades above 130% of the conversion price
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| Put options: | None
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| Bookrunners: | Morgan Stanley and Wells Fargo Securities
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| Pricing date: | Nov. 7
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| Settlement date: | Nov. 10
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| Distribution: | Rule 144A
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| Talk: | 1.375 to 1.875%, up 25% to 30%
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| Stock symbol: | NASDAQ: PODD
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| Stock price: | $71.68 as of Nov.7 close
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| Market capitalization: | $3.98 billion
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