By Rebecca Melvin
New York, Dec. 18 - Spectrum Pharmaceuticals Inc. priced $100 million of five-year convertibles at par after the market close Tuesday to yield 2.75% with an initial conversion premium of 27.5%, according to a news release.
Pricing of the Rule 144A deal came at the cheap end of talk, which was for a coupon of 2.25% to 2.75% and a premium of 27.5% to 32.5%.
The deal has a $20 million over-allotment option and was sold via Jefferies LLC and RBC Capital Markets LLC as joint bookrunners.
The notes have contingent conversion and will be settled in shares unless shareholder approval is obtained for net share settlement. The securities are also non-callable, with dividend and takeover protection.
In connection with the offering, the company has entered into convertible note hedge and warrant transactions with RBC Capital with the aim of reducing potential dilution of their common stock upon conversion of the bonds. The strike price on the warrant transactions is $14.03, which boosts the initial conversion premium from the issuer's perspective to 70%.
The net cost of the call spread will be paid for with proceeds of the bond sale. Remaining proceeds will be used for general corporate purposes, which may include working capital, research and development, clinical studies and business development.
Henderson, Nev.-based Spectrum is a biopharmaceutical company that develops and acquires drug products primarily in the in the area of hematology and oncology.
| Issuer: | Spectrum Pharmaceuticals Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $100 million
|
| Greenshoe: | $20 million
|
| Maturity: | Dec. 15, 2018
|
| Bookrunners: | Jefferies LLC, RBC Capital Markets LLC
|
| Co-managers: | HC Wainwright & Co. LLC, Roth Capital Partners
|
| Coupon: | 2.75%
|
| Price: | Par
|
| Yield: | 2.75%
|
| Conversion premium: | 27.5%
|
| Conversion price: | $10.53
|
| Conversion ratio: | 95.0107 shares
|
| Calls: | Non-callable
|
| Puts: | No puts
|
| Takeover protection: | Yes
|
| Dividend protection: | Yes
|
| Contingent conversion: | Yes
|
| Net share settlement: | Yes, if shareholder approval is obtained
|
| Call spread: | Yes, warrant strike price $14.03, boosting premium to 70% from issuer's perspective
|
| Price talk: | 2.25%-2.75%, up 27.5%-32.5%
|
| Pricing date: | Dec. 17
|
| Settlement date: | Dec. 23
|
| Stock symbol: | Nasdaq: SPPI
|
| Stock reference price: | $8.255 at close Dec. 17
|
| Distribution: | Rule 144A
|
| Market capitalization: | $511.0 million
|
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