Avid Bioservices, Inc. Announces Proposed $125 Million Offering of Exchangeable Senior Notes
March 08 2021 - 5:01PM
Avid Bioservices, Inc. (NASDAQ:CDMO) (NASDAQ:CDMOP) (the
“company”), a dedicated biologics contract development and
manufacturing organization (CDMO) working to improve patient lives
by providing high quality development and manufacturing services to
biotechnology and pharmaceutical companies, today announced that
its wholly-owned subsidiary, Avid SPV, LLC (the “Issuer”), intends
to sell, subject to market and other conditions, $125 million
aggregate principal amount of exchangeable senior notes due 2026
(the “notes”) in a private placement to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended (the “Securities Act”). The Issuer also intends to grant
the initial purchasers of the notes a 13-day option to purchase up
to an additional $18.75 million aggregate principal amount of the
notes.
The notes will be senior, unsecured obligations
of the Issuer, will be fully and unconditionally guaranteed by the
company on a senior, unsecured basis, and will accrue interest
payable semi-annually in arrears. The notes will mature on March
15, 2026, unless earlier repurchased, redeemed or exchanged.
Holders of the notes will have the right to exchange their notes
for shares of the company’s common stock in certain circumstances
and during specified periods. The notes will be settled in cash,
shares of the company’s common stock or a combination of cash and
shares of the company’s common stock, at the Issuer’s election.
The Issuer expects to make an intercompany loan
to the company of all of the net proceeds from this offering. The
company intends to use a portion of such loan to pay the cost of
the capped call transactions described below, and to use up to
approximately $41.3 million of such loan to redeem all of the
company’s outstanding 10.50% Series E Convertible Preferred Stock
(assuming such redemption occurs on April 10, 2021, all such shares
remain outstanding through such date and none of such shares are
converted into the company’s common stock prior to such
redemption). The company intends to use the remainder of such loan
for working capital and other general corporate purposes. If the
initial purchasers exercise their option to purchase additional
notes, the Issuer expects to make an intercompany loan to the
company of all of the net proceeds from the sale of additional
notes, which the company intends to use to pay the cost of
additional capped call transactions and for working capital and
other general corporate purposes. The company may also use a
portion of the net proceeds from such loans for the acquisition of,
or investment in, technologies, solutions or businesses that
complement the company’s business, although it has no commitments
to enter into any such acquisitions or investments at this
time.
In connection with the pricing of the notes, the
company expects to enter into privately negotiated capped call
transactions with one or more of the initial purchasers and/or
their respective affiliates or other financial institutions (the
“option counterparties”). The capped call transactions are expected
to cover, subject to customary adjustments, the number of shares of
the company’s common stock that will initially underlie the notes.
The capped call transactions are expected to reduce or offset the
potential dilution of the company’s common stock as a result of any
exchange of the notes and/or offset any potential cash payments the
Issuer is required to make in excess of the principal amount of
exchanged notes, as the case may be, with such reduction and/or
offset subject to a cap. If the initial purchasers exercise their
option to purchase additional notes, the company expects to enter
into additional capped call transactions with the option
counterparties.
In connection with establishing their initial
hedges of the capped call transactions, the option counterparties
and/or their respective affiliates may purchase shares of the
company’s common stock and/or enter into various derivative
transactions with respect to the company’s common stock
concurrently with, or shortly after, the pricing of the notes,
including with certain investors in the notes. This activity could
increase (or reduce the size of any decrease in) the market price
of the company’s common stock or the notes at that time.
In addition, the option counterparties and/or
their respective affiliates may modify their hedge positions by
entering into or unwinding various derivatives with respect to the
company’s common stock and/or purchasing or selling the company’s
common stock or other securities in secondary market transactions
following the pricing of the notes and prior to the maturity of the
notes (and are likely to do so on each exercise date for the capped
call transactions, which are expected to occur during the 40
trading day period beginning on the 41st scheduled trading day
prior to the maturity date of the notes). This activity could also
cause or avoid an increase or decrease in the market price of the
company’s common stock or the notes, which could affect the ability
of noteholders to exchange the notes, and, to the extent the
activity occurs during any observation period related to an
exchange of notes, it could affect the number of shares of the
company’s common stock and value of the consideration that holders
of the notes will receive upon exchange of the notes.
Neither the notes, nor any shares of the
company’s common stock potentially issuable upon exchange of the
notes, have been, nor will be, registered under the Securities Act
or any state securities laws and, unless so registered, may not be
offered or sold in the United States absent registration or an
applicable exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and other
applicable securities laws.
This press release is neither an offer to sell
nor a solicitation of an offer to buy any securities, nor shall it
constitute an offer, solicitation or sale of the securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction. The notes will be offered
to qualified institutional buyers pursuant to Rule 144A under the
Securities Act.
About Avid Bioservices,
Inc.Avid Bioservices, Inc. is a dedicated contract
development and manufacturing organization (CDMO) focused on
development and CGMP manufacturing of biopharmaceutical drug
substances derived from mammalian cell culture. The company
provides a comprehensive range of process development, CGMP
clinical and commercial manufacturing services for the
biotechnology and biopharmaceutical industries. With 28 years of
experience producing monoclonal antibodies and recombinant
proteins, the company’s services include CGMP clinical and
commercial drug substance manufacturing, bulk packaging, release
and stability testing and regulatory submissions support. For
early-stage programs, the company provides a variety of process
development activities, including upstream and downstream
development and optimization, analytical methods development,
testing and characterization. The scope of the company’s services
ranges from standalone process development projects to full
development and manufacturing programs through
commercialization.
Forward-Looking
StatementsStatements in this press release which are not
purely historical, including statements regarding the company’s
intentions, hopes, beliefs, expectations, representations,
projections, plans or predictions of the future, are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include statements regarding the proposed transaction
and the intended use of the net proceeds from the transaction, and
involve risks and uncertainties. The company’s business could be
affected by a number of other factors, including the risk factors
listed from time to time in its reports filed with
the Securities and Exchange Commission including, but not
limited to, the company’s annual report on Form 10-K for the fiscal
year ended April 30, 2020 and subsequent quarterly reports on Form
10-Q, as well as any updates to these risk factors filed from time
to time in the company’s other filings with the Securities and
Exchange Commission. The company cautions investors not to place
undue reliance on the forward-looking statements contained in this
press release, and the company disclaims any obligation, and do not
undertake, to update or revise any forward-looking statements in
this press release except as may be required by law.
Contacts:
Stephanie Diaz (Investors)
Vida Strategic Partners
415-675-7401
sdiaz@vidasp.com
Tim Brons (Media)
Vida Strategic Partners
415-675-7402
tbrons@vidasp.com
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