PHILADELPHIA, Sept. 25, 2019 /PRNewswire/ -- Lannett
Company, Inc. (NYSE: LCI) ("Lannett" or the "Company") today
announced the pricing of $75 million
aggregate principal amount of 4.50% convertible 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"). Lannett also granted
the initial purchaser of the Notes a 30-day option to purchase up
to an additional $11.25 million
aggregate principal amount of the Notes. The sale of the Notes to
the initial purchaser is expected to settle on September 27, 2019, subject to customary closing
conditions, and Lannett estimates that it will receive
approximately $72.7 million in net
proceeds (or $83.6 million if the
initial purchaser exercises its option to purchase additional Notes
in full) after deducting the initial purchaser's discount and
estimated offering expenses payable by Lannett.
The Notes will bear interest at a rate of 4.50% per year.
Interest will be payable semiannually in arrears on April 1 and October
1 of each year, beginning on April 1,
2020. The Notes will mature on October 1, 2026, unless earlier converted,
redeemed or repurchased in accordance with their terms. Lannett may
not redeem the Notes prior to October 6,
2023. Lannett may redeem for cash all or part of the Notes,
at its option, on or after October 6,
2023 if the last reported sale price of the Company'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 30 consecutive trading day period (including the last trading
day of such period) ending on, and including, the trading day
immediately preceding the date on which Lannett provides notice of
redemption at a redemption price equal to 100% of the principal
amount of the Notes to be redeemed, plus accrued and unpaid
interest to, but excluding, the redemption date. Following certain
corporate events that occur prior to the maturity date or if the
Company delivers a notice of redemption with respect to all or a
part of the Notes, the Company will, in certain circumstances,
increase the conversion rate for a holder who elects to convert its
Notes in connection with such corporate event or notice of
redemption.
The initial conversion rate for the Notes is 65.4022 shares of
the Company's common stock per $1,000
principal amount of the Notes (which is equivalent to an initial
conversion price of approximately $15.29 per share of the Company's common stock).
The initial conversion price represents a premium of approximately
10% to the $13.90 per share last
reported sale price of the Company's common stock on September 24, 2019. Upon conversion, the Notes
will be settled in shares of the Company's common stock.
In connection with the pricing of the Notes, the Company entered
into capped call transactions with an affiliate of the initial
purchaser of the Notes and certain other financial institution (the
"capped call counterparties"). The capped call transactions
initially cover, subject to customary anti-dilution adjustments,
the number of shares of the Company's common stock that initially
underlie the Notes. The capped call transactions are expected
generally to reduce potential dilution to the Company's common
stock upon any conversion of the Notes with such reduction subject
to a cap which is initially $19.46
per share, representing a premium of approximately 40% over the
last reported sale price per share of the Company's common stock on
September 24, 2019, subject to
certain adjustments under the terms of the capped call
transactions. If the initial purchaser exercises its option to
purchase additional Notes, the Company expects to enter into
additional capped call transactions with the capped call
counterparties.
The Company has been advised that, in connection with
establishing their initial hedge of the capped call transactions,
the capped call counterparties or their affiliates expect to enter
into various derivative transactions with respect to the Company's
common stock and/or purchase shares of the Company's common stock
concurrently with or shortly after the pricing of 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 capped call counterparties or their 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 of the Company in secondary market transactions
following the pricing of the Notes and prior to the maturity of the
Notes. This activity could also cause or avoid an increase or a
decrease in the market price of the Company's common stock or the
Notes, which could affect the value of the shares of the Company's
common stock that holders will receive upon conversion of the
Notes.
The Company expects to use a portion of the net proceeds from
the offering to pay the cost of the capped call transactions. The
Company intends to use the remainder of the net proceeds from the
offering to repay a portion of its existing Term Loan A under its
existing senior credit facility. If the initial purchaser exercises
its option to purchase additional Notes, the Company expects to use
a portion of the net proceeds from the sale of the additional Notes
to enter into additional capped call transactions with the capped
call counterparties and to use the remainder of the net proceeds to
repay a portion of its existing Term Loan A under its existing
senior credit facility.
This press release is neither an offer to sell nor a
solicitation of an offer to buy the Notes or the shares of the
Company's common stock issuable upon conversion of the Notes, nor
will there be any sale of these securities in any state or
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such state or jurisdiction.
The Notes and the shares of the Company's common stock issuable
upon conversion of the Notes have not been and will not be
registered under the Securities Act, or the securities laws of any
other jurisdiction, and may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements. The offering
of the Notes is being made to qualified institutional buyers
pursuant to Rule 144A under the Securities Act.
About Lannett Company, Inc.
Lannett Company, founded
in 1942, develops, manufactures, packages, markets and distributes
generic pharmaceutical products for a wide range of medical
indications. For more information, visit the Company's website
at www.lannett.com.
This news release contains certain statements of a
forward-looking nature relating to future events or future business
performance. Any such statement, including, but not limited to, the
proposed offering of the Notes, the anticipated terms of the Notes,
the expected use of the net proceeds from this transaction, whether
expressed or implied, is subject to market and other conditions,
and subject to risks and uncertainties which can cause actual
results to differ materially from those currently anticipated due
to a number of factors which include, but are not limited to, the
risk factors discussed in the Company's Form 10-K and other
documents filed with the Securities and Exchange Commission (SEC)
from time to time. These forward-looking statements represent the
Company's judgment as of the date of this news release. The Company
disclaims any intent or obligation to update these forward-looking
statements.
Lannett Contact:
Robert
Jaffe
Robert Jaffe Co., LLC
(424) 288-4098
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SOURCE Lannett Company, Inc.