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Actionable news in ANAC: Anacor Pharmaceuticals, Inc.,

Entry Into a Material Definitive

On April6, 2016, Anacor Pharmaceuticals,Inc. (the Company) issued and sold $287.5 million aggregate principal amount of 2.00% Convertible Senior Notes due 2023 (the Convertible Notes) to Goldman, Sachs& Co., Citigroup Global Markets Inc., Cowen and Company, LLC, Wedbush Securities Inc. and JMP Securities LLC, as initial purchasers, for resale to qualified institutional buyers in a private offering exempt from registration under the Securities Act of 1933, as amended (the Securities Act), in reliance upon Rule144A under the Securities Act (the Offering). Included in the Offering were $37.5 million aggregate principal amount of Convertible Notes issued upon the exercise in full of the over-allotment option granted to the initial purchasers in the Offering. The Convertible Notes are general unsecured obligations of the Company. The Convertible Notes bear interest at a fixed rate of 2.00%per year, payable semiannually in arrears on April15 and October15 of each year, beginning on October15, 2016. Subject to satisfaction of certain conditions and during certain periods, the Convertible Notes will be convertible at the option of holders into cash, shares of the Companys common stock or a combination thereof (with the form of consideration at the Companys election). The Convertible Notes will mature on April15, 2023, unless earlier purchased or converted. The Convertible Notes will not be redeemable at the Companys option prior to their maturity date.

In connection with the pricing of the Convertible Notes, the Company entered into capped call transactions with each of Citigroup Global Markets Inc. and Goldman, Sachs& Co. (the Option Counterparties). In connection with the full exercise of the over-allotment option granted to the initial purchasers in the Offering, the Company entered into additional capped call transactions with the Option Counterparties.

The Company received net proceeds from the Offering of approximately $278.9 million, after deducting the initial purchasers fees. The Company used approximately $16.1 million of the net proceeds from the Offering to fund the cost of the capped call transactions and intends to use the remaining net proceeds for general corporate purposes.

Indenture

The Company issued the Convertible Notes pursuant to an indenture dated as of April6, 2016 (the Indenture) by and between the Company and Wells Fargo Bank, National Association, as trustee.

Subject to satisfaction of certain conditions and during certain periods, the

Convertible Notes will be convertible at the option of holders into cash, shares of the Companys common stock or a combination thereof (with the form of consideration at the Companys election). The conversion rate will initially be 14.1201 shares of common stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $70.82 per share of the Companys common stock). The conversion rate and the corresponding conversion price will be subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest. The initial conversion price of the Convertible Notes represents a premium of approximately 32.5% to the $53.45 per share closing price of the Companys common stock on March31, 2016.

If the Company undergoes a fundamental change (as defined in the Indenture), holders may require the Company to purchase for cash all or part of their Convertible Notes at a purchase price equal to 100% of the principal amount of the Convertible Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date. In addition, if certain make-whole fundamental changes occur, the Company will, in certain circumstances, increase the conversion rate for any Convertible Notes converted in connection with such make-whole fundamental change.

The Convertible Notes will not be redeemable at the Companys option prior to their maturity date.

The Indenture provides for customary events of default.

The description of the Indenture and the Convertible Notes above is qualified in its entirety by reference to the text of the Indenture and...


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