St. Jude Medical Announces Pricing of Convertible Debt Offering
April 19 2007 - 6:47PM
Business Wire
St. Jude Medical, Inc. (NYSE:STJ) announced today the pricing of
$1.2 billion in aggregate principal amount of its Convertible
Senior Debentures due December 2008 in a private offering to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended. The debentures will pay
interest semi-annually at a rate of 1.22% per annum. The debentures
are convertible in certain circumstances into cash up to the
principal amount, based on a conversion rate of 19.2101 shares of
common stock per $1,000 principal amount of the debentures. This
represents an initial conversion price of approximately $52.06 per
share, representing a 20% conversion premium based on the closing
price of $43.38 per share of the Company�s common stock on April
19, 2007. Any conversion value above the principal amount will be
convertible into cash, shares of common stock or a combination of
cash and shares at the Company�s election. The initial purchaser
exercised its option to purchase $200 million aggregate principal
amount of debentures to cover over-allotments. The $1.2 billion of
debentures includes the over-allotment option. The Company intends
to use a portion of the net proceeds of the offering to repay
indebtedness under its current interim liquidity facility and
commercial paper program used to finance the previously announced
$700 million of share repurchases which were completed in February
2007. Additionally, the Company intends to use a portion of the net
proceeds of the offering to repurchase approximately $300 million
of its common stock through private block trades completed
simultaneously with the closing of the sale of the debentures, and
through subsequent purchases in the open market pursuant to a new
trading plan. Any remaining proceeds will be used for general
corporate purposes. The Company will also use a portion of the net
proceeds to fund the cost of a convertible note hedge transaction
that it has entered into with the initial purchaser of the
debentures or its affiliates in connection with the offering. The
convertible note hedge transaction, together with a concurrent
warrant transaction which the Company has entered into with the
initial purchaser of the debentures or its affiliates in connection
with the offering, is intended to offset potential dilution to the
Company�s common stock upon potential future conversion of the
debentures by effectively increasing the conversion premium
associated with the convertible debentures to approximately 40%
higher than the closing price of the Company�s common stock on
April 19, 2007, to an effective conversion price of approximately
$60.73. The closing of the sale of any debentures is expected to
occur on April 25, 2007 and is subject to the satisfaction of
customary closing conditions. In connection with establishing the
initial hedge of the convertible note hedge and warrant
transactions, the Company has been advised that other parties to
such transactions 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 debentures. These activities could have the effect
of increasing or preventing a decline in the value of the Company�s
common stock concurrently with, or following the pricing of, the
debentures. This announcement is neither an offer to sell nor a
solicitation of an offer to purchase convertible senior debentures
of St. Jude Medical, Inc. Any offers of the debentures will be made
only by means of a private offering memorandum. The debentures and
any St. Jude Medical, Inc. common stock issuable upon conversion of
the debentures have not been 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. About St. Jude
Medical St. Jude Medical is dedicated to making life better for
cardiac, neurological and chronic pain patients worldwide through
excellence in medical device technology and services. The Company
has five major focus areas that include: cardiac rhythm management,
atrial fibrillation, cardiac surgery, cardiology and
neuromodulation. Headquartered in St. Paul, Minn., St. Jude
Medical, Inc. employs more than 11,000 people worldwide. For more
information, please visit www.sjm.com. Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties. Such forward-looking
statements include the expectations, plans and prospects for the
Company, including whether or not the Company consummates the
offering of the debentures and the anticipated use of proceeds of
the offering. The statements made by the Company are based upon
management�s current expectations and are subject to certain risks
and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements.
These risks and uncertainties include market conditions and other
factors beyond the Company�s control and the risk factors and other
cautionary statements described in the Company�s filings with the
Securities and Exchange Commission, including those described in
the Company�s Annual Report on Form 10-K filed on February 28,
2007. The Company does not intend to update these statements and
undertakes no duty to any person to provide any such update under
any circumstance.
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