Sepracor greenshoe exercised, raising convertibles to $750 million

New York, Jan. 12 - Sepracor Inc. said the underwriters of its recent two-tranche offering of 0% convertible senior subordinated notes exercised the $150 million over-allotment option in full, raising the size of the deal to $750 million.

The Marlborough, Mass., pharmaceutical company originally sold $600 million of the securities before the market opened on Dec. 9.

It priced $200 million of tranche A five-year convertibles to yield 0% with a 24% initial conversion premium and $400 million of tranche B seven-year convertibles to yield 0% with a 16% initial conversion premium.

Tranche A has a $50 million greenshoe, while tranche B has a $100 million greenshoe, both now fully exercised.

Morgan Stanley & Co. Inc. was bookrunner for the Rule 144A deal.

On Jan. 8 Sepracor extended the time to exercise the greenshoe until Feb. 6.

Sepracor used proceeds to redeem all of its $435 million outstanding 5.75% convertible subordinated notes due 2006 plus accrued but unpaid interest.

The company also used $94.8 million of proceeds to enter into call spread transactions to reduce the potential dilution from conversion of the notes. In addition, deal managers will purchase up to 8 million shares of Sepracor's common stock in secondary market transactions concurrently with, prior to and possibly after pricing the notes, Sepracor said.

Any remaining funds will be used for general corporate purposes.

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