Teva does not expect to choose fundamental change option for IVAX 1.5% convertibles due 2025

New York, Dec. 6 - Teva Pharmaceutical Industries Ltd. said it does not expect to choose the "public acquirer fundamental change" option for IVAX Corp.'s 1.5% convertible senior notes due 2025.

If that is Teva's final decision, it will instead be required to pay a make-whole premium.

Teva noted that its preliminary expectation is subject to change depending on market conditions.

The 1.5% convertibles due 2025 along with IVAX's 1.5% convertible senior notes due 2024 became convertible on Dec. 1 after IVAX waived the contingent conversion provision.

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. Its 1.875% convertible senior notes due 2024 are already convertible.

IVAX has also announced a cash tender offer for its 4.5% convertible senior subordinated notes due 2008. 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 in the tender is par plus accrued interest of $6.50 per $1,000 principal amount up to but excluding Jan. 7.

The tender offer expires at 5 p.m. ET on Dec. 23, and 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.

IVAX is a Miami-based pharmaceutical company that develops branded and generic pharmaceuticals and veterinary products. Teva is a Jerusalem, Israel-based pharmaceutical company.

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