Ligand greenshoe lifts 0.75% convertibles due 2023 to $750 million

By Marisa Wong

Morgantown, W.Va., May 22 – The initial purchasers of Ligand Pharmaceuticals Inc.’s 0.75% convertible senior notes due 2023 exercised their $100 million over-allotment option in full, bringing the total size of the issuance to $750 million, according to an 8-K filing with the Securities and Exchange Commission.

Ligand priced $650 million of the five-year convertible notes before the market open on May 18 at the mid-point of talk with a coupon of 0.75% and an initial conversion premium of 30%.

Price talk had been for a coupon of 0.5% to 1% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Barclays and Goldman Sachs & Co. are bookrunners for the Rule 144A deal.

The notes are non-callable and have no investor puts. Holders may require the company to repurchase the notes in some corporate events.

The notes are contingently convertible until Nov. 15, 2022.

Conversions will be settled in cash, shares or a combination of both at the company’s option.

Ligand will settle all conversions in cash until the company has a sufficient number of authorized unissued shares to settle conversion of all outstanding notes, according to a previous company news release.

In connection with the pricing of the notes, Ligand will enter into convertible note hedge and warrant transactions.

The strike price on the warrants is $315.30 per share, representing a premium of 65% over the last reported sales price of the stock, according to the press release.

Approximately $50.3 million of net proceeds from the offering will cover the cost of the call spread, which will also be covered by proceeds from the warrant transactions.

Ligand plans to purchase up to $49.7 million or 260,000 shares of common stock from purchasers of the notes in a stock buyback.

Proceeds will be used to cover the cost of the call spread, for the share buyback, to acquire or invest in complementary businesses and technologies and for general corporate purposes.

Ligand is a San Diego, Calif.-based biopharmaceutical company focused on developing and acquiring technologies for the pharmaceutical industry.

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