Cephalon overnight $800 million convertible talked at 1.5%-2.0%, up 10%-14%

By Ronda Fears

Nashville, June 1 - Cephalon Inc. was in the overnight market pitching $800 million of 10-year non-callable convertible notes talked with a 1.5% to 2.0% coupon and 10% to 14% initial conversion premium, with proceeds earmarked to tender for all its 2.5% convertibles due 2006 at 97.5.

There is a call spread overlay involved, however, that will effectively raise the conversion premium while, to Cephalon's benefit, limit dilution. The amount of proceeds to be used for the hedge and warrant transactions has yet to be determined.

Deutsche Bank Securities is sole bookrunner of the registered deal, which will be pricing before the market opens Thursday.

The issue, senior to Cephalon's existing subordinated notes, will be non-callable for life with a 120% contingent conversion trigger and net share settlement feature. There is full dividend and takeover protection.

A $120 million greenshoe is available.

Pending consummation of the tender offer to purchase all the outstanding 2.5% convertible issue, a $600 million issue when sold in December 2001, Cephalon said it would use proceeds to repay or repurchase other debt or for working capital and other corporate purposes.

Cephalon, based in Frazer, Pa., currently markets three proprietary products in the United States: Provigil to treat narcolepsy, Gabitril to treat anxiety disorders and Actiq used to manage breakthrough cancer pain, plus more than 20 products internationally.

Cephalon shares on Wednesday closed at $40.40, down $2.02 on the day, or 4.76%.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.