Orexigen to sell $100 million seven-year convertibles to yield 2.75%-3.25%, up 27.5%-32.5%

By Rebecca Melvin

New York, Dec. 2 - Orexigen Therapeutics Inc. launched an offering of $100 million of seven-year convertible senior notes early Monday that was talked to yield a coupon of 2.75% to 3.25% with an initial conversion premium of 27.5% to 32.5%, according to a market source.

The Rule 144A offering has a $15 million greenshoe and was expected to price after the market close on Monday.

Joint bookrunners were BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, and Leerink Swann. Piper Jaffray & Co. was a co-manager.

The notes have contingent conversion if shares rise to 130% of the conversion price. They are non-callable for life. Conversion settlement will be in shares, cash or a combination of shares and cash at the company's option.

There is dividend protection via a conversion ratio adjustment and a make-whole adjustment premium in the event of a change of control.

Proceeds will be used for working capital and other general corporate purposes. A portion of the proceeds may also be used to acquire new businesses or products.

San Diego-based Orexigen is a biopharmaceutical company focused on development of treatments of obesity.

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