OSI Pharmaceuticals greenshoe exercised in full, lifts 3% convertibles due 2038 to $200 million

By Devika Patel

Knoxville, Tenn., Jan. 15 - Underwriters for OSI Pharmaceuticals, Inc.'s 3% convertible senior subordinated notes due 2038 exercised their over-allotment option in full for $25 million, increasing the size of the issue to $200 million, according to an 8-K filed with the Securities and Exchange Commission Tuesday.

As previously reported, OSI originally sold $175 million of the 30-year convertibles on Jan. 4 at par with an initial conversion premium of 65%. The convertibles have a conversion price of $73.82 per share and a conversion rate of 13.5463 shares per $1,000 note.

JPMorgan and Merrill Lynch are joint bookrunners of the Rule 144A transaction.

OSI can call the notes starting on Jan. 15, 2013 at par.

The convertibles will carry investor puts in years five, 10, 15, 20 and 25.

There is contingent conversion with a 130% hurdle and contingent payment subject to a 120% hurdle.

There are embedded warrants providing 55% coverage.

The company said it plans to use $65 million of the proceeds to repurchase 1.5 million of its common shares. The remainder will go to buy back its 3.25% convertible senior subordinated notes due 2023 and for general corporate purposes.

OSI is a Melville, N.Y.-based drug maker.

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