Salix talks $500 million seven-year convertibles at 1.5%-1.75%, up 35%

By Rebecca Melvin

New York, March 12 - Salix Pharmaceuticals Ltd. plans to price $500 million seven-year convertible senior notes on Tuesday before the market open, talked at a coupon of 1.5% to 1.75% and an initial conversion premium of 35%, a syndicate source said.

The Rule 144A offering has a greenshoe of $75 million and is being sold via bookrunner Bank of America Merrill Lynch.

The notes will be non-callable and may not be put. They will be priced together with convertible note hedge and warrant transactions.

The notes have standard change-of-control protection and dividend protection.

Proceeds will be used to repurchase up to $50 million of common stock, to repurchase from a holder a portion of the company's 5.5% convertible bond due 2028 as well as to make additional purchases of the issue at similar prices and to pay the cost of the concurrent call spread.

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

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