OSI
Pharmaceuticals, Inc. Prices $100 Million 2.00% Convertible Senior
Subordinated Note Offering
MELVILLE,
N.Y.—(BUSINESS WIRE)—Dec. 15, 2005—OSI
Pharmaceuticals, Inc. (NASDAQ:OSIP) announced today that it has
priced a private placement of $100 million aggregate principal
amount of 2.00% convertible senior subordinated notes due 2025. OSI
has also granted the initial purchaser of the notes a 30-day option
to purchase up to an additional aggregate $15 million of the
notes. The sale of the notes is expected to close on
December 21, 2005, subject to customary closing
conditions.
OSI intends to
use a part of the net proceeds to (i) purchase through the
initial purchaser or its affiliates, concurrently with the
offering, 500,000 shares of its common stock and (ii) pay
approximately $12.2 million in connection with call spread
transactions with respect to the Company’s common stock. OSI
intends to use the remaining net proceeds of approximately $72.0
million for the ongoing development and commercialization of
Tarceva(R) and Macugen(R), research and development activities,
working capital requirements and other general corporate
purposes.
The convertible
notes will pay interest semiannually in arrears through maturity at
an annual rate of 2.00% and will mature on December 15, 2025.
OSI may redeem for cash, all or part of the notes on or after
December 15, 2010 at a price equal to 100% of the principal
amount of the notes plus accrued and unpaid interest. Holders of
the notes have the right to require OSI to purchase, for cash, all
or any portion of their notes (i) on December 15, 2010,
(ii) on December 15, 2015, (iii) on
December 15, 2020, and (iv) under certain other
circumstances, as set out in the indenture, at a price equal to
100% of the principal amount of the notes plus accrued and unpaid
interest. The notes will be subordinated to existing and future
senior indebtedness and will be pari passu with OSI’s
existing senior subordinated notes due 2023.
The notes will
be convertible, in certain circumstances, into common stock of OSI
at an initial conversion rate of 33.9847 shares per $1,000
principal amount of notes (equivalent to a conversion price of
approximately $29.43 per share of common stock). The conversion
price represents a premium of 25.0% to the $23.54 per share closing
price of OSI’s common stock on December 15, 2005. Upon
conversion, OSI will have the right to deliver shares of its common
stock, cash or a combination of cash and shares of its common
stock.
In connection
with the offering, OSI has entered into call spread transactions
with respect to its common stock with an affiliate of the initial
purchaser of the notes. These transactions are intended to reduce
the potential dilution upon future conversion of the notes. The
call spread provides OSI with the option, subject to certain
customary exceptions, to acquire shares of OSI common stock at the
initial conversion price of approximately $29.43 per
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