Intrexon talks $200 million five-year convertibles to yield 3%-3.5%, up 27.5%-32.5%

By Abigail W. Adams

Portland, Me., June 27 – Intrexon Corp. plans to price $200 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 3% to 3.5% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

J.P. Morgan Securities LLC is the bookrunner for the registered offering, which carries a greenshoe of $30 million.

Concurrently with the convertible notes offering, Intrexon is offering $100 million of common stock, which will be loaned to JPMorgan in a share lending agreement, according to a 424B5 filing with the Securities and Exchange Commission.

The short position created by the share loan is meant to enable hedging activity, according to the SEC filing.

Chief executive officer and principal shareholder Randal Kirk has indicated an interest in purchasing up to all of the borrowed shares in the concurrent offering.

The closing of the convertible notes offering is contingent upon the closing of the share lending agreement and vice versa.

The notes are contingently convertible until April 1, 2023. They are non-callable. Holders may require the company to redeem the notes at par plus accrued interest upon a fundamental change.

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

Proceeds are expected to be $193.9 million, or $223.1 million if the greenshoe is exercised in full. Proceeds will be used for general corporate purposes or strategic acquisitions and investments.

Intrexon is a Germantown, Md.-based biotechnology company.

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