Progenity talks $75 million five-year convertible notes to yield 6.75%-7.25%, up 10%-15%

By Abigail W. Adams

Portland, Me., Dec. 1 – Progenity Inc. plans to price $75 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 6.75% to 7.25% and an initial conversion premium of 10% to 15%, according to a market source.

Piper Sandler Co. is the bookrunner for the Rule 144A offering, which carries a greenshoe of $15 million.

The notes are non-callable until Dec. 1, 2023 and then subject to a 130% hurdle.

The notes will be settled in stock with cash paid in lieu of fractional shares.

Entities affiliated with Athyrium Capital Management LP plan to purchase $25 million of the Rule 144A offering.

In addition, the entities will purchase a separate $78.5 million of convertible notes as part of an exchange for amounts outstanding under Progenity’s credit and security agreement with a fund managed by Athyrium.

The notes issued as part of the exchange will have the same terms as the Rule 144A offering.

Concurrently with the convertible notes offering, Progenity plans to price a secondary offering of $25 million of its common stock.

The secondary offering carries a greenshoe of $3.75 million.

Proceeds will be used for research and development, working capital and general corporate purposes.

Progenity is a San Diego-based biotechnology company.

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