Salix notifies 2.75% convertible holders of expected make-whole change

By Marisa Wong

Madison, Wis., Feb. 25 – Salix Pharmaceuticals, Ltd. notified holders of its 2.75% convertible senior notes due 2015 of an anticipated make-whole fundamental change.

The make-whole fundamental change relates to Valeant Pharmaceuticals International Inc.’s previously announced acquisition of Salix, which is expected to be completed between April 1 and May 13.

Under the terms of the 2.75% notes, Salix is required to send a notice specifying a fundamental change repurchase date to holders on or before the 20th calendar day following the effective date of the merger. The repurchase date will not be less than 20 business days and not more than 35 business days following the fundamental change notice.

The notes are currently convertible. However, notes surrendered for conversion will not be eligible for the make-whole conversion rate adjustment unless surrendered during the make-whole fundamental change period.

The make-whole fundamental change period will begin on, and include, the effective date of the merger and will continue through, and include, the close of business on the day immediately preceding the fundamental change repurchase date.

Under the indenture governing the notes, the conversion rate for notes surrendered during the make-whole fundamental change period will be increased to an amount equal to the conversion rate that would otherwise apply plus a make-whole conversion rate adjustment amount.

The current conversion rate is 21.5592 shares per $1,000 principal amount of notes. The make-whole adjustment amount will be determined based on the company’s stock price and the effective date of the merger. Based on a hypothetical effective date of April 1 and an anticipated stock price of $158.00 per share, the make-whole conversion rate adjustment would be 0.0132 shares per $1,000 of notes.

Salix is a Raleigh, N.C.-based developer and marketer of prescription pharmaceutical products and medical devices for the prevention and treatment of gastrointestinal diseases. Valeant is a Laval, Quebec-based specialty pharmaceutical company.

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