Intercept Pharmaceuticals, Inc. (Nasdaq: ICPT) (“Intercept”),
a biopharmaceutical company focused on the development and
commercialization of novel therapeutics to treat progressive
non-viral liver diseases, announced today that it has entered into
privately negotiated agreements with certain of the holders of its
existing (i) 3.25% Convertible Senior Notes due 2023 (the “2023
Notes”) and (ii) 2.00% Convertible Senior Notes due 2026 (the “2026
Notes”) to exchange an aggregate of $306.5 million principal amount
of 2023 Notes and an aggregate of $114.7 million principal amount
of 2026 Notes for a newly issued series of Convertible Senior
Secured Notes due 2026 (the “New Notes” and such transactions, the
“Exchange”). Intercept will also sell approximately $117.6 million
aggregate principal amount of New Notes for cash (the
“Subscription” and, together with the Exchange, the
“Transactions”). The Transactions are expected to close promptly,
subject to and following customary closing conditions. In the
aggregate, Intercept expects to issue approximately
$500.0 million aggregate principal amount of New Notes to the
participating holders.
Intercept estimates that cash proceeds will be approximately
$107.3 million net of advisory fees and expenses. Intercept intends
to use the net proceeds for general corporate purposes and for the
transactions described in the following paragraph.
Intercept expects to use $75.7 million of cash on hand to
repurchase shares of its common stock in privately negotiated
transactions at a price per share of $16.75, equal to the closing
price of the Company’s common stock on August 10, 2021, in order to
facilitate the Transactions (the “Buyback”). These repurchases
could increase, or prevent a decrease in, the market price of the
Company’s common stock or the New Notes. Intercept may also buy
back and retire additional 2023 Notes.
Following the Transactions and the Buyback, Intercept
anticipates changes to its debt and share count profiles as
reflected below:
- 66.6% of the 2023 Notes
retired.
- Shares outstanding reduced by 4.52
million (13.6%), from 33.2 million to 28.7 million.
|
Pre- |
Exchanged |
|
Post- |
% |
($MM) |
Transactions |
Old Notes |
New Notes |
Sold |
Transactions |
Retired |
Remaining |
2023 Notes |
460.0 |
306.5 |
- |
- |
153.5 |
66.6 |
% |
33.4 |
% |
2026
Notes |
230.0 |
114.7 |
- |
- |
115.3 |
49.8 |
% |
50.2 |
% |
Subtotal |
690.0 |
421.1 |
- |
- |
268.9 |
61.0 |
% |
39.0 |
% |
New
Notes |
- |
- |
382.4 |
117.6 |
500.0 |
- |
|
- |
|
Total |
690.0 |
421.1 |
382.4 |
117.6 |
768.9 |
- |
|
- |
|
Share count at 06/30/21 |
33,201,181 |
|
Cash for share buybacks ($) |
75,735,158.50 |
|
Closing share price on 08/10/21 ($) |
16.75 |
|
Shares retired |
|
4,521,502 |
|
Pro forma share count |
28,679,679 |
|
%
Reduction |
|
13.6 |
% |
The New Notes will be guaranteed by certain subsidiaries of
Intercept which meet certain threshold requirements (any such
subsidiary, a “Guarantor”), and will be senior obligations of
Intercept and any such Guarantor. The New Notes will be secured by
a first priority security interest in substantially all of the
assets of Intercept and any Guarantors, subject to certain
exceptions. Interest will be payable semi-annually in arrears at a
rate of 3.50% per annum on February 15 and August 15 of each year,
beginning on February 15, 2022. The New Notes will mature on
February 15, 2026, unless earlier converted, redeemed or
repurchased.
The initial conversion rate of the New Notes will be 47.7612
shares of Intercept common stock per $1,000 principal amount of New
Notes (equivalent to an initial conversion price of approximately
$20.94 per share), subject to customary adjustments. The initial
conversion price of the New Notes represents a premium of
approximately 25.00% over the last reported sale price of
Intercept’s common stock on August 10, 2021. The New Notes will be
convertible into cash, shares of Intercept’s common stock or a
combination of cash and shares of Intercept’s common stock, at
Intercept’s election. Prior to November 15, 2025, the New Notes
will be convertible at the option of the holders only upon
satisfaction of certain conditions and during certain periods,
including if the last reported sale price of Intercept’s common
stock exceeds 130% of the conversion price for certain specified
periods (the "Stock Price Conversion Condition"). Holders may
convert their New Notes at their option at any time on or after
November 15, 2025 until the close of business on the business day
immediately preceding the maturity date.
Intercept may redeem for cash all or any portion of the New
Notes, at its option, on or after February 20, 2024 if the last
reported sale price of Intercept’s common stock has been at least
130% of the conversion price then in effect for at least 20 trading
days (whether or not consecutive) during any period of 30
consecutive trading days (including the last trading day of such
period) ending on, and including, the trading day immediately
preceding the date on which Intercept provides notice of redemption
at a redemption price equal to 100% of the principal amount of the
New Notes to be redeemed, plus accrued and unpaid interest, if any,
to, but excluding, the redemption date. If (1) Intercept elects to
redeem all or a portion of the New Notes, (2) upon the occurrence
of certain corporate events or (3) if the Stock Price Conversion
Condition is satisfied with respect to any calendar quarter
commencing after the calendar quarter ending on September 30, 2022,
Intercept will, under certain circumstances, increase the
conversion rate for holders who elect to convert New Notes (1)
during the related redemption period, (2) in connection with such
corporate event or (3) in connection with such Stock Price
Conversion Condition. If Intercept undergoes a “fundamental
change,” holders of the New Notes may require Intercept to
repurchase for cash all or any portion of their New Notes at a
fundamental change repurchase price equal to 100% of the principal
amount of the New Notes to be repurchased, plus accrued and unpaid
interest if any, to, but excluding, the fundamental change
repurchase date.
In connection with the Transactions, Intercept intends to enter
into a base indenture, as supplemented by a supplemental indenture,
establishing the terms of the New Notes, and a security agreement
establishing a first priority (subject to certain exceptions)
security interest in substantially all of the assets of Intercept
and any Guarantors.
Neither the New Notes, nor any shares of Intercept’s common
stock issuable upon conversion of the New Notes, have been
registered under the Securities Act of 1933, as amended (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 shall not constitute an offer to sell or a
solicitation of an offer to buy the New Notes, Intercept’s common
stock potentially issuable upon conversion of the New Notes or any
other securities, and will not constitute an offer, solicitation or
sale in any state or jurisdiction in which such an offer,
solicitation or sale would be unlawful.
About Intercept
Intercept is a biopharmaceutical company focused on the
development and commercialization of novel therapeutics to treat
progressive non-viral liver diseases, including primary biliary
cholangitis (PBC) and nonalcoholic steatohepatitis (NASH). Founded
in 2002 in New York, Intercept has operations in the United States,
Europe and Canada.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking statements,
including, but not limited to, statements related to the terms of
the New Notes and the Transactions. These statements constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of
1934, as amended. The words “anticipate,” “believe,” “estimate,”
“expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,”
“potential,” “will,” “would,” “could,” “should,” “possible,”
“continue,” and similar expressions are intended to identify
forward-looking statements, although not all forward-looking
statements contain these identifying words. Readers are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date of this release, and Intercept
undertakes no obligation to update any forward-looking statement
except as required by law. These forward-looking statements are
based on estimates and assumptions by Intercept’s management that,
although believed to be reasonable, are inherently uncertain and
subject to a number of risks. There can be no assurance that
Intercept will be able to complete the Transactions on acceptable
terms, or at all. Actual results may differ materially from
historical results or those anticipated or predicted by Intercept’s
forward-looking statements as a result of various important
factors, including, but not limited to, whether or not Intercept
will be able to consummate the Transactions on the timeline or with
the terms anticipated, if at all; the performance of our business,
including our research and development, our regulatory approvals,
and our results of operations; the impact of general U.S. and
foreign economic, industry, market, regulatory or political
conditions; and the other risks and uncertainties identified in
Intercept’s periodic filings filed with the U.S. Securities and
Exchange Commission, including Intercept’s Annual Report on Form
10-K for the year ended December 31, 2020 and Intercept’s Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2021 and June
30, 2021.
Contact
For more information about Intercept, please contact:
Lisa DeFrancesco+1-646-565-4833investors@interceptpharma.com
Christopher Frates+1-646-757-2371media@interceptpharma.com
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