9-5-13 8:00 AM EDT | Email Article

Cubist Pharmaceuticals, Inc. (NASDAQ:CBST) today announced the pricing of $700 million aggregate principal amount of convertible senior unsecured notes that will be issued in two series, with one series of $300 million aggregate principal amount maturing on September 1, 2018 (the 2018 notes) and the other series of $400 million aggregate principal amount maturing on September 1, 2020 (the 2020 notes and together with the 2018 notes, the Notes). The Notes are being offered and sold to qualified institutional buyers pursuant to Rule 144A under the Securities Exchange Act of 1933, as amended. Cubist has granted the underwriters an option to purchase up to an additional $50 million aggregate principal amount of each series of the Notes.

The 2018 Notes will bear interest at a rate of 1.125% per year and the 2020 Notes will bear interest at a rate of 1.875%, in each case, payable on March 1 and September 1 of each year, beginning on March 1, 2014. The Notes will not be redeemable prior to maturity. The Notes will be convertible, only during certain periods and subject to certain circumstances, into cash, shares of Cubist’s common stock, or a combination of cash and shares of Cubist’s common stock, at Cubist’s election. The initial conversion rate for each series of Notes is 12.1318 shares of Cubist’s common stock per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $82.43 per share of Cubist’s common stock, representing an approximately 32.5% conversion premium based on the last reported sale price of Cubist’s common stock of $62.21 per share on September 4, 2013.

In connection with the pricing of the Notes, Cubist also entered into privately negotiated convertible note hedge transactions and warrant transactions with the initial purchasers or their respective affiliates (the option counterparties) in order to reduce the potential dilution with respect to shares of Cubist's common stock upon any conversion of the Notes and/or offset any cash payments Cubist is required to make in excess of the principal amount of converted Notes. If the initial purchasers exercise their option to purchase additional Notes, Cubist may enter into additional convertible note hedge and warrant transactions. The warrant transactions will have a dilutive effect with respect to Cubist's common stock to the extent that the market price per share of Cubist's common stock, as measured under the terms of the warrant transactions, exceeds the applicable strike price of the warrants, which is initially 55% higher than the last reported sale price of Cubist’s common stock on September 4, 2013.

Cubist estimates that the net proceeds of the offering will be $679 million (or $776 million if the initial purchasers’ options to purchase additional notes are exercised in full), after deducting the initial purchasers’ discounts and commissions, but prior to deducting estimated offering expenses. Cubist intends to use the majority of the net proceeds of the offering to fund its previously announced acquisition of Optimer Pharmaceuticals, Inc. (NASDAQ: OPTR) and to pay $51 million to fund the cost of the convertible note hedge transactions (after such cost is partially offset by proceeds from the warrant transactions). The remaining net proceeds from the offering will be used for general corporate purposes.

Cubist has been advised that, in connection with the convertible note hedge and warrant transactions, the option counterparties or their respective affiliates expect to purchase shares of Cubist’s common stock and/or enter into various derivative transactions with respect to Cubist’s common stock concurrently with or shortly after the pricing of the Notes. This activity could increase (or reduce the size of any decrease in) the market price of Cubist’s common stock or the Notes at that time. In addition, the option counterparties or their respective affiliates may, from time to time following the pricing of the Notes and prior to the maturity of the Notes, enter into or unwind various derivatives with respect to Cubist’s common stock and/or purchase or sell Cubist’s common stock in secondary market transactions (and are likely to do so during any observation period related to a conversion of Notes). This activity could also cause a decrease or avoid an increase in the market price of Cubist’s common stock or the Notes.

The offer and sale of the Notes are not being registered under the Securities Act of 1933, as amended, or any state securities laws. The Notes may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and any applicable state securities laws.

This news release does not constitute an offer to sell or a solicitation of an offer to buy the notes described herein, nor shall there be any sale of these notes, in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the laws of such jurisdiction.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements, including statements regarding the estimated net proceeds of the offering and Cubist’s planned use of the net proceeds from the sale of the Notes. Forward-looking statements are based on current beliefs and expectations and are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including without limitation, whether or not Cubist will be able to consummate the offering and the hedge and warrant transactions on the timeline or with the terms anticipated, if at all, and, if consummated, that Cubist will also close its recently announced acquisition of Optimer Pharmaceuticals, Inc. on the anticipated timeline, or at all, so that it can use the proceeds of the offering as anticipated. In addition, management retains broad discretion with respect to the allocation of the net proceeds of this offering. You are cautioned not to place significant reliance on forward-looking statements. The information in this press release speaks only as of the date of this release, and Cubist undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances occurring after the date of this press release.

Cubist:
INVESTORS:
Eileen C. McIntyre, (781) 860-8533
Vice President, Investor Relations
eileen.mcintyre@cubist.com
MEDIA:
Julie DiCarlo, (781) 860-8063
Senior Director, Corporate Communications
julie.dicarlo@cubist.com

Copyright Business Wire 2013
Add a Comment

News   More...

Start Premium Trial Register For Free

P F Fund Financial Data (13,000+ funds)
P F Stock Financial Data (7,000+ stocks)
P F Stock and Fund Screeners (basic)
P F Investing Articles and Market Commentary
P F Articles Archive (>30 days)
P F Discuss (dozens of stock, fund, bond, and general bulletin boards)
P F Portfolio Manager (basic)
P F Morningstar Investment Classroom
P F Access Your Portfolio Anytime, Anywhere via Your Mobile Device
P   Morningstar Fund Analyst Reports (full research on 1,700 funds, ETFs, and CEFs)
P   Morningstar Stock Analyst Reports (full research on more than 1,100 stocks)
P   Portfolio Manager (advanced with 10 X-Ray analyses, including recommendations)
P   Portfolio Monitor (monthly and on-demand personalized portfolio statements)
P   Morningstar Proprietary Stock Information (stock star ratings, buy/sell prices, economic moat ratings, and more)
P   Morningstar 5-Star Stock and Fund Favorites & Red Flags eNewsletters
P   Premium Stock and Fund Screeners (advanced with nearly infinite ways to find the best securities for you)
P   Discounts on Morningstar newsletters, books, seminars, and more

Sign-up to Morningstar


Basic Access

Articles and Videos
Morningstar video reports, articles, data, and tools. Dig into our lineup of e-newsletters and investing classroom courses outlining sensible strategies for maximizing your investments.
Morningstar Discuss
Follow the buzz on individual stocks or fund families. Plus, read the latest posts from Morningstar members and analysts.
Portfolio Manager
Track your investments and watch lists with our Portfolio Manager. Customize your view with our comprehensive stock, fund, and ETF data.

Access these features and more when you sign up for Free Membership.
Join Morningstar today. It's Free.

Unlimited Access

Analyst Research
Gather in-depth, actionable insight on over 3,700 stock and mutual funds covered by Morningstar analysts. View our mutual fund Analyst Reports favored by professionals, savvy experienced investors, and new investors researching options for retirement savings, college plans, or other investment needs.
Portfolio X-Ray®
Ensure your portfolio is positioned exactly how you want with Morningstar's X-Ray Interpreter and Stock Intersection tools. A Barron's "Best of the Web" award winner for five years running, X-Ray Interpreter goes under the hood of your portfolio to provide a useful allocation, sector, and geographic analysis. And you can discover how much of a stock you really own, individually and through mutual funds, with Stock Intersection.
Investment Picks
Find new 5-star stocks (greatly undervalued companies) to consider daily. Our 5-star stock rating is a proven winner, consistently beating benchmarks like the S&P 500. Plus, browse our Fund Analyst Picks and Stewardship Grades to find shareholder-friendly mutual funds that are poised for outperformance.
Portfolio Monitor
Get a clear view of your investments with personalized reports about your portfolio. Receive monthly statements and generate reports on-demand to help you stay on track to meet your investment goals.

Access these features and more when you sign up for Premium Membership.
Start your free 14-day trial today online
Your subscription may be tax deductible. Please contact your tax advisor.

Content Partners
Morningstar - 2013/9/5 - Cubist Pharmaceuticals Prices $700 Million of Convertible Senior Notes
Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol |  Title Star Rating |  Category |  Total Assets |  Top Holdings |  Top Sectors |  Symbol |  Name Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol / Ticker |  Title Star Rating |  Category |  Total Assets |  Symbol / Ticker |  Name Title |  Date |  Author |  Collection |  Popularity |  Interest Title |  Date |  Company |  Symbol |  Interest |  Popularity Title |  Date |  Company |  Symbol |  Interest |  Popularity Title |  Date |  Author |  Collection |  Interest |  Popularity

Previous: Cubist Pharmaceuticals Issues Voluntary Nationwide Recall of Four Lots of Cubicin (Daptomycin for Injection) 500Mg in 10Ml Single Use Vials Due to Presence of Particulate Matter  |  Next: Cubist Pharmaceuticals to Acquire Optimer Pharmaceuticals