Salix greenshoe exercise lifts 2.75% convertibles to $345 million

By Susanna Moon

Chicago, June 3 - Underwriters for Salix Pharmaceuticals, Ltd.'s 2.75% five-year convertible senior notes exercised their $45 million over-allotment option in full on Wednesday, increasing the size of the issue to $345 million, according to an 8-K filing with the Securities and Exchange Commission.

The company priced an upsized $300 million of the five-year convertibles after the close of markets on May 27. The issue was initially going to be $200 million in size. The greenshoe was initially talked at $30 million.

The registered offering was sold via joint bookrunners Bank of America Merrill Lynch and Jefferies & Co. Inc. Co-managers were BMO, Caris, JMP Securities and Piper Jaffray & Co.

The notes are non-callable for life with no puts.

Salix also entered into capped call transactions in connection with the offering intended to reduce potential dilution upon conversion of the notes, except if the volume-weighted average price of Salix shares exceeds the cap price at the time of conversion.

Proceeds are earmarked for business development and other general corporate purposes, including commercialization of potential products, clinical trials, R&D, and general and administrative expenses. A portion of proceeds will also be used to pay the cost of the capped call transactions.

Salix is based in Raleigh, N.C., and makes and markets prescription pharmaceuticals for the treatment of gastrointestinal diseases.

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