By Sara Rosenberg
New York, May 5 - Oscient Pharmaceuticals Corp. sold an upsized offering of $125 million of seven-year senior convertible notes at par to yield 3.5% with a 35% initial conversion premium via joint bookrunners J.P. Morgan Securities and Merrill Lynch & Co.
There is an $18.75 million greenshoe.
The Rule 144A deal, which was originally expected to be sized at $75 million with a $25 million greenshoe, priced at the low end of yield talk for a 3.5% to 4.0% coupon and at the aggressive end of premium guidance of 30% to 35%.
Holders will have full dividend protection via a conversion ratio adjustment.
The senior notes are non-callable for six years. Coupon payments for the first three years will be collateralized with Treasuries.
After purchasing the Treasuries, proceeds are earmarked to support the launch of Oscient's drug, Factive tablets, this summer, to accelerate development for the tablets and an intravenous form of that drug and Ramoplanin, to pursue additional in-licensing opportunities and for general corporate purposes.
Waltham, Mass.-based Oscient concentrates its efforts in two principal areas - infectious diseases caused by bacterial and fungal pathogens and human diseases with a significant genetic component. The company has nine established product development programs. Its lead product, Ramoplanin, is in a phase three clinical trial for the prevention of bloodstream infections and a phase two trial for the treatment of diarrhea. The company has seven product alliances with partners such as Amgen, AstraZeneca, Schering-Plough and Wyeth.
Terms of the deal are:
| Issuer: | Oscient Pharmaceuticals Corp.
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| Issue: | Convertible senior notes
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| Bookrunner: | J.P. Morgan Securities and Merrill Lynch & Co.
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| Amount: | $125 million
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| Greenshoe: | $18.75 million
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| Maturity: | April 15, 2011
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| Coupon: | 3.5%
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| Price: | Par
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| Yield: | 3.5%
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| Conversion premium: | 35%
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| Conversion price: | $6.64
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| Conversion ratio: | 150.5571
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| Call: | Non-callable for six years
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| Price talk: | 3.5% to 4.0%, up 30% to 35%
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| Pricing date: | May 4, after the close
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| Settlement date: | May 10
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| Distribution: | Rule 144A
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