Heska talks $75 million seven-year convertibles to yield 3.25%-3.75%, up 35%-40%

By Rebecca Melvin

New York, Sept. 11 – Heska Corp. was talking a $75 million offering of seven-year convertible notes to yield 3.25% to 3.75% with an initial conversion premium of 35% to 40%, according to a source after the market close on Wednesday.

J.P. Morgan Securities LLC and Piper Jaffray & Co. are the initial purchasers of the Rule 144A notes.

The deal, which has a $11.25 million greenshoe, was expected to price after the market close on Thursday.

The notes are non-callable for four years and then provisionally callable at a share price hurdle of 130%.

They will be convertible prior to March 15, 2026 at the option of the holders only upon the occurrence of certain events and during certain periods. They have standard takeover and dividend protection and net share settlement.

The proceeds of the notes will be used to repay all outstanding indebtedness of $12.75 million under its existing credit facility, to fully fund a $2 million cash collateral account contemplated to secure its obligations under its credit facility as amended in connection with the offering, to fund its intended expansion efforts, including through acquisitions of complementary businesses or technologies or other strategic transactions, and for working capital and other general corporate purposes.

The company said in its news release that it is evaluating potential acquisitions or other strategic transactions, but has no agreements or commitments currently in place.

The veterinary diagnostic and specialty health care products company is based in Loveland, Colo.

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