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IVAX tenders for 4.5% convertibles, 1.5% convertibles due 2024, 2025 to become convertible
By Angela McDaniels
Seattle, Nov. 23 - IVAX Corp. said it has begun a cash tender offer for its 4.5% convertible senior subordinated notes due 2008. It also said its 1.5% convertible senior notes due 2024 and 1.5% convertible senior notes due 2025 will become convertible on Dec. 1.
The indenture governing the 4.5% convertibles requires IVAX to make the offer as a result of its merger with a subsidiary of Teva Pharmaceutical Industries Ltd.
The purchase price will be par plus accrued interest of $6.50 per $1,000 principal amount up to but excluding January 7.
The tender offer expires at 5 p.m. ET on Dec. 23. Holders may withdraw their tendered convertibles at any time prior to the expiration time.
The company estimates the total purchase price for all outstanding 4.5% convertibles to be $285.75 million.
IVAX will buy tendered convertibles on Jan. 9.
Following consummation of the Teva subsidiary merger, convertibles not tendered will no longer be convertible into IVAX common stock. Instead, each $1,000 principal amount will be convertible 50% into cash and 50% into Teva American Depositary Receipts.
This provision in the indenture covering the convertibles differs from the corresponding provisions for IVAX's 1.5% convertible senior notes due 2024, 1.875% convertible senior notes due 2024 and 1.5% convertible senior notes due 2025. These will become convertible based on the consideration that non-electing IVAX shareholders will receive in the merger.
Under current market conditions, the value of the stock payable in the merger significantly exceeds the cash. If, as would be expected, a substantial majority of the holders of IVAX shares elect to take Teva ADRs, then non-electing holders of IVAX shares will receive $26.00 per share in cash. In this case, the 1.5% convertible senior notes due 2024, 1.875% convertible senior notes due 2024 and 1.5% convertible senior notes due 2025 that have not been converted will become convertible into cash at the rate of $26 per share. However Teva can decide on the 1.5% convertible senior notes due 2025 to either pay a make-whole premium or choose the "public acquirer fundamental change" option, which would change the payment. Teva has not yet decided which option to take.
Noteholders may obtain the notice of change in control and offer to purchase through the paying agent, U.S. Bank NA (800 934-6802).
For the 1.5% convertible senior notes due 2024 and 1.5% convertible senior notes due 2025, IVAX said it was waived the contingent conversion provision effective Dec. 1.
The company took the decision in order to allow the in-the-money convertibles to be exchanged for stock ahead of its merger with Teva.
The 1.875% convertible senior notes due 2024 are already convertible.
IVAX is a Miami-based pharmaceutical company that develops branded and generic pharmaceuticals and veterinary products.
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