Summary
Regeneron Pharmaceuticals, Inc. (REGN) announced a significant financing event through the issuance of $400 million in aggregate principal amount of 1.875% Convertible Senior Notes due October 1, 2016. This offering, executed on October 18, 2011, with an option for an additional $60 million, was made through a Purchase Agreement with Goldman, Sachs & Co. as the initial purchaser. The Notes are convertible into cash, common stock, or a combination thereof, with an initial conversion price of approximately $84.02 per share, representing a 30% premium over the stock's closing price on October 17, 2011. In conjunction with the note offering, Regeneron also entered into convertible note hedge and warrant transactions. These derivative transactions are designed to mitigate potential dilution to existing shareholders upon conversion of the Notes. The hedge transactions aim to offset dilution if the stock price rises above the conversion price, while the warrants, with a strike price of approximately $103.41, could be dilutive if the stock price significantly exceeds this level. The net cost of these hedging and warrant strategies was approximately $23.7 million.
Key Highlights
- 1Regeneron issued $400 million in 1.875% Convertible Senior Notes due October 1, 2016, with an option for an additional $60 million.
- 2The Notes are convertible into cash, common stock, or a combination, at an initial conversion price of approximately $84.02 per share, a 30% premium to the market price at the time.
- 3The offering was conducted under exemptions from registration, selling to qualified institutional buyers via Rule 144A.
- 4Convertible note hedge transactions were put in place to offset potential dilution from note conversions, with a strike price matching the initial conversion price.
- 5Warrant transactions were also executed, with a strike price of approximately $103.41, which could be dilutive if the stock price exceeds this level.
- 6The net cost for the convertible note hedge and warrant transactions was approximately $23.7 million.
- 7The net proceeds from the Notes offering, after expenses, were approximately $391.3 million.