Medicines announces make-whole fundamental change for convertibles

By Sarah Lizee

Olympia, Wash., Jan. 6 – Medicines Co. provided notice of a make-whole fundamental change to holders of its 2.5% convertible senior notes due 2022, 2.75% convertible senior notes due 2023 and 3.5% convertible senior notes due 2024.

Medicines’ previously announced buyout by Novartis constitutes a make-whole fundamental change under the convertibles, according to a press release. The buyout was completed Jan. 6.

The company also provided notice to holders that it will redeem all of the 2022 convertibles on Feb. 5, 2020 at par plus accrued interest.

Because the merger constituted a share exchange event, the right to convert the notes into shares of common stock was changed to the right to convert the notes into the cash amount that a holder of a number of shares of common stock equal to the applicable conversion rate immediately prior to the merger would have been entitled to receive based on the offer price. The company entered into supplemental indentures to effect those changes.

The conversion rate of the 2022 convertibles has not been temporarily increased. Noteholders are entitled to convert their 2022 convertibles at any time before 5 p.m. ET on Feb. 4 into $2,539.851 in cash without interest per $1,000 principal amount.

The conversion rate of the 2023 notes has temporarily increased to 20.5526 shares, which is equal to a conversion price of about $48.656 per share of common stock. It was previously 20.4198 shares of common stock per $1,000 principal amount.

As a result of the share exchange event, the temporary increase in the conversion rate enables noteholders to temporarily convert the 2023 notes into $1,746.971 in cash without interest per $1,000 principal amount of 2023 notes, based on the offer price.

The conversion rate of the 2024 notes has temporarily increased to 40.2988 shares, which is equal to a conversion price of about $24.815 per share of common stock. It was previously 39.6920 shares of common stock per $1,000 principal amount.

As a result of the share exchange event, the temporary increase in the conversion rate enables noteholders to temporarily convert the 2024 notes into $3,425.398 in cash without interest per $1,000 principal amount of 2024 notes, based on the offer price.

The temporarily increased conversion rate of the 2023 and 2024 notes will only be available if the notes are surrendered for conversion on or before 5 p.m. ET on the business day immediately prior to the fundamental change repurchase date of Jan. 26. Thereafter, noteholders are entitled to convert their 2023 notes into $1,735.683 in cash without interest per $1,000 principal amount of 2023 notes, and their 2024 notes into $3,373.820 in cash without interest per $1,000 principal amount of 2024 notes.

Due to the merger, the company is also required to offer to repurchase the convertibles of each noteholder for cash at a repurchase price of par plus accrued interest to but excluding Jan. 26.

The trustee, paying agent and conversion agent under each indenture is Wells Fargo Bank, NA.

Medicines is a Parsippany, N.J.-based biopharmaceutical company.

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