Ligand greenshoe lifts 0.75% five-year convertibles to $245 million

By Susanna Moon

Chicago, Aug. 18 – Ligand Pharmaceuticals Inc. said underwriters exercised the $20 million over-allotment option on its 0.75% five-year convertible senior notes, bringing the total deal size to $245 million.

As previously reported, Ligand priced $225 million of the convertibles after the market close on Aug. 12 to yield 0.75% with an initial conversion premium of 35%.

Pricing of the Rule 144A deal came at the midpoint of talk, which was for 0.5% to 1% yield and 32.5% to 37.5% premium.

BofA Merrill Lynch and Deutsche Bank Securities LLC were the joint bookrunners.

Concurrently with the pricing of the notes, the company repurchased $40 million shares of common stock.

The company also entered into certain convertible note hedge and warrant transactions, or a call spread. The strike price on the warrants is $125.08, which boosts the initial conversion premium from the issuer’s perspective to 125%.

Proceeds of the bond issue are being used for the share repurchases, with remaining proceeds earmarked for additional share repurchases of up to a total of $200 million, and $35 million is being used to fund the net cost of the call spread.

The notes are non-callable with no puts.

San Diego, Calif.-based Ligand is a biopharmaceutical company.

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