By Ronda Fears
Nashville, July 19 - Novavax Inc. announced Monday that it has sold $35 million of 4.75% convertible notes with a 17% initial conversion premium in a private placement via Banc of America Securities.
Also Monday, Novavax and King Pharmaceuticals Inc. announced that in conjunction with King's previously announced strategy to divest many of its women's health products, Novavax and King have mutually agreed to end their co-promotion agreement for Estrasorb. This will enable Novavax to acquire all worldwide rights for the product, for which Novavax will pay King $22 million in cash and issue 3.78 million shares of stock.
Proceeds from the convertible offering and a $5 million stock offering will be used to pay King.
"This is a positive and transformational event for Novavax." said Nelson Sims, chief executive of Novavax. "Estrasorb has significant market potential both in the U.S. and abroad. In addition, after accounting for this transaction, the financing will add over $23 million to our balance sheet to support Estrasorb as well as our other strategic initiatives."
Novavax said the transaction and related financing will add over $23 million to its balance sheet, reduce debt by $5 million and extend its debt terms.
Under terms of the transaction, Novavax will acquire a portion of King's women's health sales force - about 50 sales people - to provide competitive sales force coverage and will receive from King some $8 million in cash to provide additional support for marketing and promoting Estrasorb.
With the completion of the transaction, King will hold about 4.1 million Novavax shares, or around 10.4% of the total 39.6 million shares of outstanding Novavax stock.
Terms of the deal are:
| Issuer: | Novavax Inc.
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| Issue: | Convertible senior notes
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| Placement agent: | Banc of America Securities
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| Amount: | $35 million
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| Maturity: | July 15, 2009
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| Coupon: | 4.75%
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| Price: | Par
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| Conversion price: | $6.15
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| Conversion premium: | 17%
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| Call: | Non-callable for 3 years
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| Closing date: | July 19
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| Distribution: | Regulation D private placement
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