By Susanna Moon
Chicago, Aug. 23 - Omnicare, Inc. said it plans to retire about $180.46 million principal amount of its outstanding 3.75% convertible senior subordinated notes due 2025 under separate, privately negotiated exchange agreements.
In the exchange, the company will issue $424.25 million principal amount of new 3.5% convertible senior subordinated notes due Feb. 15, 2044 to the holders for an original issue price of about $388.83 million, according to an 8-K filing with the Securities and Exchange Commission. The issue price will accrete on a semiannual basis.
The new notes will pay interest semiannually at a rate of 3.5% per year.
Beginning in February 2024, the notes will pay contingent interest if the trading price of the new notes is at or above an upside trigger level of $1,200 per $1,000 principal amount of the new notes for the specified periods.
In addition, beginning in February 2021, contingent interest will be payable if the new notes are trading at or below the downside trigger level, which is initially $550 per $1,000 of new notes and will increase as described in the note terms, for the specified periods.
The contingent interest payable per $1,000 principal amount of new notes for any contingent interest period will be
• 0.25% of the average trading price of the new notes during the specified measurement period for contingent interest payable as a result of the upside trigger; and
• 0.5% of par for contingent interest payable as a result of the downside trigger.
The new notes have an initial conversion rate of 14.2857 shares of common stock per $1,000 original principal amount of notes. The initial conversion price is about $70.00 per share, representing a 28.44% premium over the company's (NYSE: OCR) closing price of $54.50 on Aug. 22.
Up until Feb. 15, 2019, the company may redeem the new notes at par plus accrued interest if the daily volume-weighted average price of its common stock is at least 130% of the conversion price for at least 20 trading days during any 30-consecutive-trading-day period, the filing noted. After Feb. 15, 2019, the company may call the new notes at a redemption price equal to the accreted issue price to date plus accrued interest.
Holders may convert the new notes into shares of the company's common stock if
• Prior to Feb. 15, 2042, during any calendar quarter beginning after Sept. 30 if the closing sale price of the company's common stock for at least 20 trading days in the 30 consecutive trading days ending on and including the last trading day of the previous calendar quarter is more than 130% of the conversion price;
• At any time beginning Feb. 15, 2042;
• If the new notes have been called for redemption;
• If specified distributions to holders of the company's common stock are made or specified corporate events occur; or
• During the five consecutive business days after any five-consecutive-trading-day period in which the trading price per $1,000 principal amount of new notes on each such trading day is less than 98% of the product of the closing sale price of the company's common stock on such trading day and the conversion rate of the new notes.
If a conversion occurs in connection with a redemption or certain types of fundamental changes, the company will increase the conversion rate. In addition, holders may require the company to repurchase all or a portion of their notes upon a fundamental change at a cash repurchase price equal to the accreted issue price to date plus accrued interest.
More repurchase agreements
The company said it also entered into separate, privately negotiated purchase agreements to repurchase about $5.15 million principal amount of its outstanding 3¾% notes due 2025 and $150 million principal amount of its outstanding 7¾% senior subordinated notes due 2020.
After settlement, about $132.42 million principal amount of the 3¾% notes due 2025 and $400 million principal amount of the 7¾% notes will remain outstanding.
Omnicare is a Cincinnati-based provider of pharmaceutical services to patients and providers.
| Issuer: | Omnicare, Inc.
|
| Issue: | Convertible senior subordinated notes
|
| Maturity: | 2044
|
| Coupon: | 3.5%
|
| Original issue price: | $388.83 million
|
| Conversion rate: | 14.2857 shares per $1,000 of notes
|
| Conversion price: | $70.00
|
| Conversion premium: | 28.44%
|
| Ticker symbol: | NYSE: OCR
|
| Stock price: | $54.50 at close on Aug. 22
|
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