PDL BioPharma (PDLI) Announces Pricing of Aggregate $150M Conv. Notes Offering

November 17, 2016 9:03 AM EST

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PDL BioPharma, Inc. (PDL) (Nasdaq: PDLI) announced that it has agreed to sell $150.0 million aggregate principal amount of its 2.75% Convertible Senior Notes due 2021 (the Notes) in an underwritten public offering. The conversion rate of the Notes will initially be 262.2951 shares of common stock per $1,000 principal amount of the Notes, equivalent to an initial conversion price of approximately $3.81 per share of common stock, subject to adjustment. The net proceeds from the offering, after deducting the underwriters discount and other estimated offering expenses are expected to be approximately $145.8 million. PDL granted the underwriters an option to purchase up to an additional $22.5 million aggregate principal amount of the Notes to cover overallotments. PDL expects that the offering will be completed, subject to customary closing conditions, on November 22, 2016.

RBC Capital Markets (RBC) is acting as sole book-running manager and sole structuring advisor for the Notes offering. Piper Jaffray is acting as lead manager and Roth Capital Partners is acting as co-manager.

In connection with the offering of the Notes, PDL entered into a capped call transaction with Royal Bank of Canada, an affiliate of RBC (the Counterparty). The capped call transaction is expected generally to offset potential dilution to PDL's common stock and/or any cash payments PDL will be required to make in excess of the principal amount upon any conversion of the Notes, with such offset subject to a cap. In addition, if the underwriters exercise their option to purchase additional Notes, PDL expects to use a portion of the net proceeds from the sale of such additional Notes to enter into an additional capped call transaction.

PDL has been advised that, in connection with establishing their initial hedge of the capped call transaction, the Counterparty expects to enter into various derivative transactions with respect to PDL's common stock concurrently with or shortly after the pricing of the Notes. This activity could increase (or reduce the size of any decrease in) the market price of PDL's common stock or the Notes at that time. In addition, the Counterparty may modify its hedge positions by entering into or unwinding derivatives with respect to PDL's common stock and/or by purchasing or selling PDL's common stock in secondary market transactions following the pricing of the Notes (and is likely to do so during any observation period related to a conversion of Notes). This activity could also cause or avoid an increase or a decrease in the market price of PDL's common stock or the Notes, which could affect a holder's ability to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of Notes, could affect the amount and value of the consideration that a holder will receive upon conversion of the Notes.

Concurrently with the offering, PDL intends to use approximately $120.0 million of the net proceeds from the offering to repurchase approximately $120.0 million principal amount of PDL's outstanding 4.00% convertible senior notes due 2018. The balance of the net proceeds from the Notes offering will be used to pay the cost of the capped call transactions, acquire income-generating assets and pharmaceutical products, and for general corporate purposes.

The registration statement pursuant to which this offering is being made is effective pursuant to the Securities Act of 1933. Offers and sales of the Notes may be made only by the prospectus and related prospectus supplement, which, when available, may be obtained from RBC Capital Markets, Attention: Equity Syndicate, 200 Vesey Street, 8th Floor, New York, NY 10281 or by calling (877) 822-4089. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

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