Cephalon $350 million five-year convertibles to yield 2.5%-3%, up 10%-15%

By Rebecca Melvin

New York, May 20 - Cephalon Inc. planned to price $350 million of five-year convertibles after the close Wednesday to yield 2.5% to 3% with an initial conversion premium of 10% to 15%, according to a syndicate source.

Concurrently, the Frazer, Pa., biopharmaceutical concern planned to price $300 million of common stock.

There is a greenshoe of an additional $45 million of common stock and an additional $52.5 million of convertible notes.

The senior subordinated notes will be convertible into cash and shares.

Proceeds from the registered, off-the-shelf offerings are for general corporate purposes.

A portion of proceeds will be used by Cephalon to enter into a hedging transaction on its common stock with Deutsche Bank AG, London Branch.

Cephalon also expects to enter into separate warrant transactions with the hedge counterparty, which would result in additional proceeds to Cephalon.

Deutsche Bank Securities Inc. is the bookrunner for both offerings.

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