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Theravance greenshoe lifts convertibles due 2023 to $287.5 million
By Toni Weeks
San Diego, Jan. 22 - Underwriters for Theravance Inc.'s offering of 10-year convertible subordinated notes due Jan. 15, 2023 exercised their $37.5 million greenshoe in full, raising total proceeds to $287.5 million, according to a press release.
Bank of America Merrill Lynch is the bookrunner for the offering.
Settlement is expected Jan. 24.
As previously reported, the company priced $250 million of the notes after market close last Thursday at par to yield 2.125% with an initial conversion premium of 32.5%.
In connection with the greenshoe exercise, Theravance has entered into privately negotiated capped call option transactions with one or more of the underwriters or their affiliates. The company also entered into capped call transactions with hedge counterparties for the initial $250 million of the notes on the same terms, the release noted.
Capped call options are expected to reduce the potential dilution upon conversion of the notes if the market price of the common stock, as measured under the capped call transaction terms, is greater than the strike price of the capped call transactions, which initially corresponds to the conversion price of the notes. If the market price of the stock, as measured under the capped call transactions terms, exceeds $38.00 per share - the initial cap price of the capped call transactions - the anti-dilutive effect of the capped call transactions will be limited.
Proceeds are intended to be used for potential milestone payments to GlaxoSmithKline plc if there is any approval or launch of products under the parties' collaboration, for the potential repayment of debt and for other general corporate purposes.
The company also intends to use a portion of the proceeds to pay the cost of entering into the capped call transactions with the underwriter and/or affiliates.
Theravance is a San Francisco-based biopharmaceutical company.
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