PharmaNet Development announces exchange offer for 2.25% convertibles

By Angela McDaniels

Tacoma, Wash., Nov. 20 - PharmaNet Development Group, Inc. said it will offer to exchange its $143.75 million of 2.25% convertible senior notes due 2024 for $115 million of 8% convertible senior notes due 2014 and cash.

PharmaNet expected to begin the offer Thursday, according to a company news release.

For each $1,000 principal amount of notes accepted, the company will issue $800 principal amount of new notes and $250 in cash.

The exchange offer will expire at 11:59 p.m. ET on Dec. 18.

The new notes will have the following:

• Different conversion rights and features, including an initial conversion price of $6.05 per share instead of $41.08 and physical settlement upon conversion rather than net share settlement;

• A provisional call option under which the company may redeem the new notes at a price determined by a pre-established formula prior to Aug. 15, 2012 under certain circumstances;

• A call option under which the company may redeem the new notes beginning Aug. 15, 2012;

• An put option at par plus accrued interest on Aug. 15, 2012, compared with Aug. 15, 2009 for the outstanding notes; and

• After the collateral effective date, a second-priority security interest on some assets of the company's domestic subsidiaries.

The collateral effective date will be the earlier of the date on which PharmaNet's credit facility is terminated and the effective date of an amendment to the credit facility that will allow the issuance of the second-priority liens securing the new notes.

It will be an event of default under the new notes if the collateral effective date does not occur by Feb. 15.

From the issuance date to the collateral effective date, the new notes will be senior unsecured obligations.

Holders of about 57% of the notes said they plan to participate in the exchange offer, according to the release. A minimum of 56.5% of the notes must be tendered in order to consummate the exchange offer.

UBS Investment Bank is the dealer manager, and U.S. Bank NA is the exchange agent. The information agent is Morrow & Co., LLC (800 662-5200 for banks and brokerage firms or 800 607-0088 for noteholders).

PharmaNet is a drug development services company based in Princeton, N.J.

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