INCLINE VILLAGE, Nev.,
Sept. 12, 2019 /PRNewswire/ -- PDL
BioPharma, Inc. ("PDL" or the "Company") (Nasdaq: PDLI) today
announced that it has entered into separate privately negotiated
transactions to exchange approximately $86.1
million in aggregate principal amount of its 2.75%
Convertible Senior Notes due 2021 (the "Existing Notes") for
approximately $86.1 million in
aggregate original principal amount of new 2.75% Convertible Senior
Notes due 2024 (the "Exchange Notes" and such transaction, the
"Exchange") together with an aggregate of approximately
$6.0 million of cash. Following
the closing of the Exchange, approximately $63.9 million aggregate principal amount of
Existing Notes will remain outstanding with terms unchanged. The
Existing Notes and Exchange Notes hereafter referred to herein as
the "Notes."
"We are capitalizing on the strength of the convertible notes
market to extend the maturity of our debt under favorable terms,"
said Dominique Monnet, president and CEO of PDL. "This
transaction will further strengthen our balance sheet as we execute
on our strategy to build a focused portfolio of actively managed
operating companies with significant revenue potential."
Each $1,000 principal amount of
Existing Notes will be exchanged for $1,000 original principal amount of Exchange
Notes and a cash payment of $70.
The Exchange Notes will be senior, unsecured obligations of PDL
and will bear interest at a rate of 2.75% per year. Interest
will be payable semi-annually in arrears on June 1 and December
1 of each year, beginning on December
1, 2019. The Exchange Notes will mature on December 1, 2024, unless earlier converted,
redeemed or repurchased in accordance with the terms of the
Exchange Notes.
The original principal amount of the Exchange Notes will accrete
at a rate of 2.375% per year commencing September 17, 2019 through the maturity date of
the Exchange Notes. The accreted principal amount of the Exchange
Notes is payable in cash upon maturity. However, regular cash
interest payments on the Exchange Notes, and the composition of the
consideration due upon their conversion, will be determined based
on their original principal amount and not their accreted principal
amount.
The initial conversion rate of the Exchange Notes is 262.2951
share of PDL's common stock per $1,000 original principal amount, which is
equivalent to an initial conversion price of approximately
$3.81 per share of PDL's common
stock. The initial conversion price of the Exchange Notes
represents a premium of approximately 61% over the last reported
sale price of PDL's common stock on the Nasdaq Global Select Market
on September 12, 2019. The Exchange
Notes will be convertible at the option of the holders in certain
circumstances and during certain periods prior to the close of
business on the business day immediately preceding June 1, 2024 or at any time beginning on
June 1, 2024, until the close of
business on the second scheduled trading day immediately preceding
the stated maturity. Upon conversion of the Exchange Notes, holders
will receive cash, shares of PDL's common stock or a combination of
cash and shares of PDL's common stock, at PDL's election.
Holders of the Exchange Notes will have the right, at their
option, to require PDL to purchase their notes for cash if PDL
undergoes a fundamental change (as defined in the indenture for the
Exchange Notes), at a repurchase price equal to 100% of the
accreted principal amount of the Exchange Notes on the fundamental
change repurchase date, plus accrued and unpaid interest, if any,
to, but excluding, such repurchase date. If a "make-whole
fundamental change" (as defined in the indenture for the Exchange
Notes) occurs, then, under certain circumstances, PDL will increase
the conversion rate applicable to Exchange Notes converted in
connection with that make-whole fundamental change.
On or after December 1, 2021 and
on or before the 60th trading day before the stated
maturity, PDL may redeem all or any portion of the Exchange Notes
for cash, but only if the last reported sale price per share of
PDL's common stock exceeds 128% of the conversion price of the
Exchange Notes for a specified period of time. The redemption price
for any Exchange Notes to be redeemed will equal 100% of the
accreted principal amount of such Exchange Notes on the redemption
date, plus accrued and unpaid interest, if any, to, but excluding,
the redemption date.
PDL will not receive any cash proceeds from the Exchange. In
return for issuing the Exchange Notes pursuant to the Exchange, PDL
will receive and cancel the exchanged Existing Notes.
Piper Jaffray & Co. acted as
financial advisor to PDL in connection with the Exchange.
In connection with the Exchange, PDL entered into a capped call
transaction with Royal Bank of Canada (the "Counterparty" or "RBC") on
similar terms and conditions as the capped call transaction entered
into by PDL and Counterparty in connection with the Existing Notes
(the "Existing Capped Call"). 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 original principal amount upon any conversion of the
Exchange Notes, with such offset subject to a cap initially equal
to $4.88 per share (which represents
a premium of approximately 106% over the last reported sale price
of PDL's common stock on the Nasdaq Global Select Market on
September 12, 2019), subject to
certain adjustments under the terms of the capped call transaction.
In addition, PDL and the Counterparty entered into an agreement to
terminate a portion of the Existing Capped Call, in a notional
amount corresponding to the amount of Existing Notes exchanged.
PDL has been advised that, in connection with the entry into the
capped call transaction, the termination of the Existing Capped
Call, the partial unwinding of its hedge position with respect to
the Existing Capped Call and establishing its initial hedge
position with respect to the capped call transaction for the
Exchange Notes, the Counterparty (and or its affiliates) expects to
purchase and/or sell shares of PDL's common stock and/or enter into
various derivative transactions with respect to PDL's common stock
concurrently with or shortly after the entry into the Exchange and
during any valuation period related thereto, which PDL expects to
commence on the trading day immediately following the entry into
the Exchange. This activity could cause or avoid an increase or
decrease in the market price of PDL's common stock or the Notes at
that time. In connection with the unwinding of the Existing Capped
Call, the Company expects to receive separately a payment from
Counterparty in an amount that depends on the market price of the
Company's common shares over a valuation period as agreed with
Counterparty.
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 entry into the Exchange
and any valuation period related to the establishment of its
initial hedge position with respect to the capped call transaction
or partial unwinding of its hedge position with respect to the
Existing Capped Call (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.
About PDL BioPharma, Inc.
PDL's mission is to improve the lives of patients and create
value for our shareholders and our people by applying our capital
and expertise for the successful development and commercialization
of innovative therapeutics by our partner companies. We deliver on
our mission by entering into strategic transactions involving
innovative late clinical-stage or early commercial-stage
therapeutics with attractive revenue growth potential.
NOTE: PDL, PDL BioPharma, the PDL logo and associated
logos and the PDL BioPharma logo are trademarks or registered
trademarks of, and are proprietary to, PDL BioPharma, Inc. which
reserves all rights therein.
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SOURCE PDL BioPharma, Inc.