NEW YORK (GenomeWeb News) – Cepheid said after the close of the market on Monday that it plans to offer $250 million aggregate principal amount of convertible senior notes due 2021.
The notes will be offered and sold to qualified institutional buyers. The Sunnyvale, Calif.-based firm added that it intends to grant the notes' initial purchasers the option to purchase up to $37.5 million amount of notes to cover any overallotments.
The notes will pay interest semi-annually. They will mature on Feb. 1, 2021, and prior to the close of the business day on Aug. 1, 2020, they will be convertible at the option of holders during certain periods. Afterwards, the notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
When converted the notes may be settled in shares of Cepheid's common stock, cash, or a combination of the two at Cepheid's discretion, the company said.
Morgan Stanley and Jefferies are acting as the initial purchasers of the notes. Cepheid said it expects to enter into capped call transactions with one or more of the initial note purchasers.
A capped call is a type of security that places a limit on the holder's profit. Cepheid said that the capped call transactions are expected to "reduce the potential dilution and/or offset the potential cash payments" above the principal amount upon conversion of the notes that Cepheid may have to make.
Net proceeds from the offering will be used for general corporate purposes, including potential acquisitions and strategic transactions, and to pay the cost of the capped call transaction, Cepheid said.