Spectrum Pharmaceuticals Announces Pricing of $100 Million Convertible Notes Offering
December 18 2013 - 7:00AM
Business Wire
Spectrum Pharmaceuticals, Inc. (NasdaqGS: SPPI) announced today
the pricing of its offering of $100 million aggregate principal
amount of 2.75% convertible senior notes due 2018 (the “Convertible
Notes”). The Convertible Notes will be offered and sold in a
private placement to qualified institutional buyers pursuant to
Rule 144A under the Securities Act of 1933, as amended (the “Act”).
The Company has also granted an option to the initial purchasers to
purchase up to an additional $20 million aggregate principal amount
of Convertible Notes, issuable within 13 calendar days of the
original issue date, solely to cover over-allotments. The offering
is expected to close on December 23, 2013, subject to satisfaction
of customary closing conditions.
The Convertible Notes will bear cash interest at a rate of 2.75%
per year, payable semi-annually on June 15 and December 15,
beginning on June 15, 2014. The Convertible Notes will not be
redeemable prior to maturity. Initially, the Company will settle
conversions of the Convertible Notes by delivering shares of the
Company’s common stock (“Common Stock”). However, if the Company
obtains stockholder approval in accordance with applicable NASDAQ
rules, the Company will settle conversions of the Convertible Notes
by paying or delivering, as the case may be, shares of Common
Stock, cash, or a combination of cash and shares of Common Stock,
at the Company's election, based on the conversion rate. The
Convertible Notes will mature on December 15, 2018, unless
repurchased or converted in accordance with their terms prior to
such date. Prior to June 15, 2018, the Convertible Notes will be
convertible only upon the occurrence of certain events and during
certain periods, and thereafter, at any time until the second
scheduled trading day immediately preceding the maturity date. The
initial conversion rate will be 95.0107 shares of Common Stock per
$1,000 principal amount of Convertible Notes, which is equivalent
to an initial conversion price of approximately $10.53 per share of
Common Stock, subject to adjustment in certain circumstances. This
initial conversion price represents a premium of approximately
27.5% above the last reported sale price of the Common Stock of
$8.255 per share on December 17, 2013.
In connection with the pricing of the Convertible Notes, the
Company entered into convertible note hedge transactions and
separate warrant transactions with RBC Capital Markets, LLC (the
“Option Counterparty”), in order to reduce the potential dilution
to the Common Stock and/or offset any cash payments the Company is
required to make in excess of the principal amount upon conversion
of the Convertible Notes in the event that the market price of the
Common Stock is greater than the strike price of the convertible
note hedge transactions. The strike price of the convertible note
hedge transactions is initially equal to the conversion price of
the Convertible Notes. The strike price of the warrant transactions
will initially be approximately $14.03 per share of Common Stock,
which is approximately 70% above the last reported sale price of
the Common Stock on December 17, 2013.
The warrant transactions will have a dilutive effect with
respect to the Common Stock to the extent that the market price per
share of the Common Stock, as measured under the terms of the
warrant transactions, exceeds the strike price of the warrants. If
the initial purchasers exercise their over-allotment option, the
Company expects to enter into additional convertible note hedge
transactions and additional warrant transactions with the Option
Counterparty on terms similar to those described above.
The Company expects to use a portion of the net proceeds from
the sale of the Convertible Notes to pay the cost of the
convertible note hedge transactions (after such cost is partially
offset by proceeds from the warrant transactions). The Company
expects to use the remainder of the net proceeds for general
corporate purposes, which may include working capital, research and
development and clinical studies. The Company may also use a
portion of the net proceeds to acquire or license additional drug
candidates or complementary technologies; however, there are no
current agreements or commitments to complete any such
transaction.
The Company has been advised by the Option Counterparty that, in
connection with establishing its initial hedge positions with
respect to the convertible note hedge transactions and the warrant
transactions, the Option Counterparty and/or its affiliates expect
to purchase shares of the Common Stock and/or enter into various
derivative transactions with respect to the Common Stock
concurrently with or shortly after the pricing of the Convertible
Notes. This activity could increase (or reduce the size of any
decrease in) the market price of the Common Stock or the
Convertible Notes at that time.
In addition, the Company has been advised that the Option
Counterparty and/or its affiliates may modify their hedge positions
by entering into or unwinding various derivatives with respect to
the Common Stock and/or purchasing or selling shares of Common
Stock or other securities of the Company in open market
transactions following the pricing of the Convertible Notes and
prior to the maturity of the Convertible Notes (and are likely to
do so during any observation period related to a conversion of
Convertible Notes). This activity could also cause or avoid an
increase or a decrease in the market price of the Common Stock or
the Convertible Notes, which could affect the ability of holders of
the Convertible Notes to convert the Convertible Notes and, to the
extent the activity occurs during any observation period related to
a conversion of Convertible Notes, could affect the amount and
value of the consideration that holders of the Convertible Notes
will receive upon conversion of the Convertible Notes.
Jefferies LLC and RBC Capital Markets, LLC are acting as joint
book-running managers for the offering of Convertible Notes. H.C.
Wainwright & Co., LLC and Roth Capital Partners are acting as
co-managers.
This press release does not constitute an offer to sell or a
solicitation to buy any of the securities described herein, nor
shall there be any sale of these securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful. Any offer of the Convertible Notes will be made only by
means of a private offering memorandum. The Convertible Notes and
the Common Stock issuable upon conversion of the Convertible Notes,
if any, will not be registered under the Act or any state
securities laws, and unless so registered, may not be offered or
sold in the United States except pursuant to an exemption from the
registration requirements of the Act and applicable state
securities laws.
Forward-looking statement — This press release contains
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements relate to future events or occurrences and involve risks
and uncertainties that could cause actual results to differ
materially. All statements made in this press release other than
statements of historical fact, including statements with respect to
the expected closing date of the offering and the intended use of
proceeds from the offering, are forward-looking statements. These
statements are based on management's beliefs and assumptions based
on information currently available to management. Although the
Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance
that those expectations will prove to be correct. These
forward-looking statements speak only as of the date of this press
release. The Company disclaims any obligation to update these
statements. These forward-looking statements are subject to risks
and uncertainties that may cause actual results to differ
materially from expectations, including difficulties or delays in
marketing or pricing the proposed offering, the failure of
satisfaction of one or more conditions to closing of the offering,
fluctuations in the price of the Common Stock, and adverse
developments in general economic conditions. Additional risks that
may affect the Company are discussed in the Company’s filings with
the Securities and Exchange Commission; including the Company’s
Annual Report on Form 10-K for the year ended December 31, 2012 (as
amended) and its Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2013.
SPECTRUM PHARMACEUTICALS, INC.®, FUSILEV®, FOLOTYN®, ZEVALIN®
and MARQIBO® are registered trademarks of Spectrum Pharmaceuticals,
Inc and its affiliates. REDEFINING CANCER CARE™ and the Spectrum
Pharmaceuticals logos are trademarks owned by Spectrum
Pharmaceuticals, Inc. Any other trademarks are the property of
their respective owners.
© 2013 Spectrum Pharmaceuticals, Inc. All Rights Reserved.
Spectrum Pharmaceuticals, Inc.Shiv KapoorVice President,
Strategic Planning & Investor
Relations702-835-6300InvestorRelations@sppirx.com
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