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Cephalon announces expected make-whole conversion amounts for notes
By Angela McDaniels
Tacoma, Wash., Aug. 22 - Cephalon, Inc.'s upcoming acquisition by Teva Pharmaceutical Industries Ltd. will constitute a fundamental change under the indentures governing Cephalon's 2.5% convertible senior subordinated notes due 2014 and 2% convertible senior subordinated notes due 2015.
The company entered into the merger agreement on May 1 and currently expects the acquisition to close on Oct. 14. Each share of Cephalon stock will be canceled and converted automatically into the right to receive $81.50 in cash.
In connection with the merger, the 2.5% convertibles will be convertible when the merger closes, and the 2% convertibles will be convertible beginning 40 days before the merger is expected to close, according to a company news release.
Both series will remain convertible until 5 p.m. ET on the second trading day preceding the fundamental change purchase date, as defined in the note indenture.
The merger will be a make-whole adjustment event. Using an Oct. 14 closing date and based on a stock price of $81.50 and a conversion rate immediately prior to the merger of 14.4928 shares, the conversion rate would be increased by 0.8959 shares of common stock per $1,000 principal amount of 2.5% convertibles for holders converting during the conversion period.
For the 2% convertibles, the make-whole premium is expected to be 2.89% of par for notes converted during the conversion period.
Cephalon is a biopharmaceutical company based in Frazer, Pa. Teva makes generic and human pharmaceuticals as well as active pharmaceutical ingredients. It is based in Petach Tikva, Israel.
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