8-KSecurities & ListingOther Events

VERTEX PHARMACEUTICALS INC / MA 8-K Report, Unregistered Securities Sale (Aug 8, 2006)

Filed August 8, 2006For Securities:VRTX

Summary

Vertex Pharmaceuticals Inc. (VRTX) filed an 8-K report on August 8, 2006, detailing a significant transaction involving its 5¾% Convertible Senior Subordinated Notes due 2011. The company entered into exchange agreements with three noteholders to convert an aggregate principal amount of $58,345,000 of these notes, plus accrued interest, into approximately 4,064,500 shares of VRTX common stock. This exchange is expected to be completed by August 9, 2006. This transaction is notable as it is structured as an exempt offering under Section 3(a)(9) of the Securities Act of 1933, meaning no commissions or remuneration were paid for the exchange. The company anticipates a non-cash charge of approximately $5.0 million related to this exchange, which will be recognized in its third quarter 2006 financial results. This charge is attributed to the issuance of incremental shares beyond what would have been issued upon a standard conversion of the notes.

Key Highlights

  • 1Vertex Pharmaceuticals entered into exchange agreements to convert $58,345,000 of its 5¾% Convertible Senior Subordinated Notes due 2011.
  • 2Approximately 4,064,500 shares of VRTX common stock will be issued in exchange for the notes.
  • 3The exchange agreements were made with three existing noteholders.
  • 4The transaction is scheduled for completion on or before August 9, 2006.
  • 5The exchange is exempt from registration under Section 3(a)(9) of the Securities Act of 1933, involving no commissions paid.
  • 6Vertex expects a non-cash charge of approximately $5.0 million related to the incremental shares issued.
  • 7This non-cash charge will be reflected in the Company's third quarter 2006 financial results.

Frequently Asked Questions

This 8-K filing reports on Vertex Pharmaceuticals' entry into exchange agreements with noteholders to convert a significant amount of its convertible senior subordinated notes into common stock. It also discloses an expected non-cash charge related to this transaction.

Approximately 4,064,500 shares of Vertex's common stock will be issued in exchange for $58,345,000 aggregate principal amount of its 5¾% Convertible Senior Subordinated Notes due 2011, plus accrued interest.

It's reported under 'Unregistered Sales of Equity Securities' because the shares are being issued directly. The transaction is exempt from registration under Section 3(a)(9) of the Securities Act of 1933 because it's an exchange by the company of its own securities with existing security holders, and no commission or remuneration was paid.

Vertex anticipates a non-cash charge of approximately $5.0 million. This charge is related to the issuance of more shares than would have been issued under the original conversion terms of the notes. This charge will be recognized in the company's third quarter 2006 financial results.