Avid Bioservices (CDMO) Announces Proposed $ 125 Million Exchangeable Senior Note Offer

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Avid Bioservices, Inc. (NASDAQ: CDMO) (NASDAQ: CDMOP) (the “Company”), an organization dedicated to the development and contract manufacturing of biological products (CDMO) that works to improve the lives of patients 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 in principal total exchangeable senior notes due 2026 (the “Notes”) in a private placement to qualified institutional purchasers in accordance with 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 in total principal 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 bear interest payable semi-annually in arrears. The Notes will mature on March 15, 2026, unless they are redeemed, redeemed or exchanged earlier. Noteholders will have the right to exchange their Notes for common shares of the Company under certain circumstances and for specified periods. The Notes will be settled for cash, common shares of the Company or a combination of cash and common shares of the Company, at the option of the issuer.

The Issuer expects to make an intercompany loan to the Company of all of the net proceeds of this offering. The company intends to use a portion of this loan to pay for the cost of the capped purchase transactions described below, and to use up to approximately $ 41.3 million of this loan to redeem all of the loan. 10.50% Series E convertible preferred shares of the company (assuming such redemption occurs on April 10, 2021, all such shares remain outstanding until that date and none of these shares are converted into ordinary shares of the company before this repurchase). The company intends to use the remainder of this loan for working capital and other general business purposes. If the initial buyers exercise their option to purchase additional bonds, the Issuer expects to make an intercompany loan to the company of all of the net proceeds from the sale of additional bonds, which the company intends. to use to pay the cost of an additional capped call. transactions and for working capital and other general corporate purposes. The company may also use a portion of the net proceeds of these loans for the acquisition or investment in technologies, solutions or activities that complement the business of the company, although it has no commitment to enter into any such acquisitions or investments at this time. .

With respect to ticket pricing, the Company expects to enter into privately negotiated capped purchase transactions with one or more of the original purchasers and / or their respective subsidiaries or other financial institutions (the “Option Counterparties”). ). Capped purchase transactions are expected to cover, subject to customary adjustments, the number of common shares of the company that will initially underpin the ratings. Capped purchase transactions are expected to reduce or offset the potential dilution of the Company’s common stock as a result of any exchange of Notes and / or offset any potential cash payment the issuer is required to make in excess of the amount. principal of the tickets exchanged. , where applicable, with such a reduction and / or capped compensation. If the initial purchasers exercise their option to purchase additional Notes, the Company expects to enter into additional capped purchase transactions with the option counterparties.

As part of establishing their initial hedges of capped purchase transactions, option counterparties and / or their respective subsidiaries may purchase ordinary shares of the company and / or enter into various derivative transactions relating to ordinary shares of the company at the same time as, or shortly thereafter, the quotation of the notes, including with certain investors in the notes. Such activity may increase (or reduce the extent of any decrease) in the price of the Company’s common shares or the Notes at that time.

In addition, option counterparties and / or their respective subsidiaries may change their hedging positions by entering into or unwinding various derivatives relating to the common stock of the company and / or by buying or selling common stock of the company or ” other securities in secondary market transactions following the price of the Notes and prior to the maturity of the Notes (and are likely to do so on each exercise date for capped purchase transactions, which are expected to take place during the 40 trading day period beginning on the 41st trading day provided before the maturity date of the Notes). This activity could also cause or prevent an increase or decrease in the market price of the Company’s common shares or the Notes, which could affect the ability of Noteholders to exchange the Notes and, to the extent that the activity occurs. during any Observation Period related to an exchange of Notes, this could affect the number of common shares of the Company and the value of the consideration that holders of the Notes will receive upon the exchange of the Notes.

Neither the Notes, nor the common shares of the Company issuable upon exchange of the Notes, have been or will be registered under the Securities Act or any state securities law and, unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption or in connection with a transaction not subject to the registration requirements of the Securities Act and other applicable securities laws.


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