Cambrex withdraws $125 million convertibles at eleventh hour

By Ronda Fears

Nashville, Tenn., Dec. 7 - Cambrex Corp. withdrew its offering of $125 million of five-year convertible subordinated notes suddenly, the market learned early Friday as final terms were thought to be coming on the Rule 144A deal. It had been slated to price after the market close Thursday at which time syndicate sources said it was a "go" with no changes. Banc of America Securities and Bear Stearns & Co. were joint book-running lead managers for the deal.

In a company statement, Cambrex stated that it was withdrawing the deal "due to changed market conditions," which were not defined. A call to the company seeking more information was not returned.

Sources familiar with the deal said everything was lined up for the deal to proceed, such as investors lined up to buy the issue, but the company decided to pull the plug at the last minute. Price talk had put the deal pricing to yield 3.5% to 4.0% with a 30% to 34% initial conversion premium, pretty much in line with terms of recent deals.

The company's statement that market conditions had changed perplexed most market players, since the deal was just launched on Tuesday. Cambrex shares closed Friday up $1.61 to $38.59. The stock on Tuesday closed down $1.30 to $37.50.

Last week, East Rutherford, N.J.-based Cambrex announced a reorganization whereby on Jan. 1 its operating units that primarily produce specialty and fine chemicals, and animal health and agriculture products will be combined under a new subsidiary Rutherford Chemicals Inc. As a result, the company said it expects to take one-time charges in the fourth quarter estimated to be between $10 million and $20 million, the majority of which are expected to be non-cash items.

Also last week, the company announced $430 million in new credit lines consisting of a 364-day renewable senior revolving credit facility for $161.25 million and a 5-year senior revolving credit facility for $268.75 million. The new agreements renew and extend about $300 million of existing bank debt that was scheduled to mature in September 2002, the company said. The company had said proceeds of the convertible offering, which could reach $150 million with the greenshoe, would be used mainly to pay down amounts under its revolving credit lines.

Cambrex is a global, diversified life science company that provides products and services to the pharmaceutical, biopharmaceutical, biotechnology and other research industries.

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