Cephalon Prices $600 Million Convertible Subordinated Notes Offering
Friday June 6, 9:30 am ET
[If not a zero/zero, it was close enough. I guess that Cepahlon's shareholders are to be congratulated. Now, let's just hope that those bonds are really converted as that will take away a lot of the debt overhang].
WEST CHESTER, Pa., June 6 /PRNewswire-FirstCall/ -- Cephalon, Inc. (Nasdaq: CEPH - News) announced today the pricing of its offering of $600 million aggregate principal amount of Convertible Subordinated Notes to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and Regulation S under the Securities Act. The sale of the notes is expected to close on June 11, 2003. The notes were priced at 100 percent of their principal amounts. The notes will be subordinate to existing and future senior indebtedness of Cephalon. The notes will be issued in two tranches and have the following salient terms:
-- $300 million aggregate principal amount of Zero Coupon Convertible Subordinated Notes due 2033 (plus up to an additional $75 million aggregate principal amount if the initial purchasers' option to purchase additional notes is exercised in full), first putable June 2008 (the "2008 Notes") at a price of 100.25 percent of the aggregate principal amount. The notes are convertible prior to maturity, subject to certain conditions, into shares of Cephalon's common stock at a conversion price of $59.50 per share (a conversion rate of approximately 16.8067 shares per $1,000 principal amount of notes). The initial conversion price represents a 23.8 percent premium to the last reported Nasdaq composite bid for Cephalon common stock on June 5, 2003, which was $48.05 per share. Cephalon may redeem any outstanding 2008 Notes for cash on June 15, 2008 at a price equal to 100.25 percent of the principal amount of such notes redeemed and after June 15, 2008 at a price equal to 100 percent of the principal amount of such notes redeemed; and
-- $300 million aggregate principal amount of Zero Coupon Convertible Subordinated Notes due 2033 (plus up to an additional $75 million aggregate principal amount if the initial purchasers' option to purchase additional notes is exercised in full), first putable June 2010 (the "2010 Notes") at a price of 100.25 percent of the aggregate principal amount. The notes are convertible prior to maturity, subject to certain conditions, into shares of Cephalon's common stock at a conversion price of $56.50 per share (a conversion rate of approximately 17.6991 shares per $1,000 principal amount of notes). The initial conversion price represents a 17.6 percent premium to the last reported Nasdaq composite bid for Cephalon common stock on June 5, 2003, which was $48.05 per share. Cephalon may redeem any outstanding 2010 Notes for cash on June 15, 2010 at a price equal to 100.25 percent of the principal amount of such notes redeemed and after June 15, 2010 at a price equal to 100 percent of the principal amount of such notes redeemed.
Cephalon also granted the initial purchasers of the notes a 13-day option to purchase up to an additional $75 million principal amount of the 2008 Notes and an additional $75 million principal amount of the 2010 Notes.
Cephalon plans to use the net proceeds from the offering for:
-- The redemption of all of the Company's outstanding 5 1/4 percent Convertible Subordinated Notes due 2006 ($174 million aggregate principal amount outstanding as of the date hereof) at the redemption price of 103.15 percent of the principal amount redeemed plus accrued and unpaid interest to the redemption date;
-- The purchase from Credit Suisse First Boston (CSFBI") of
a convertible note hedge strategy with respect to Cephalon's common stock, which has the effect of increasing the effective conversion price of the notes from the Company's perspective to $72.08 per share. This effective conversion price represents a %50 premium to the last reported Nasdaq composite bid for Cephalon common stock on June 5, 2003. In connection with those transactions, CSFBI will take positions in Cephalon's common stock in secondary market transactions and/or enter into various derivative transactions both in anticipation of and after the pricing of the notes; and
-- Working capital and other corporate purposes, which may include the acquisition of other businesses, products, product rights or technologies and the repurchase, redemption or retirement of other existing indebtedness. Cephalon does not currently have any definitive agreements, arrangements or understandings with respect to any such uses. |
