Avid Bioservices Announces Pricing of Private Placement of Convertible Notes
March 06 2024 - 11:58PM
Avid Bioservices, Inc. (NASDAQ:CDMO), a dedicated biologics
contract development and manufacturing organization (CDMO),
announced today the pricing of $160 million aggregate principal
amount of 7.00% Convertible Senior Notes due 2029 (the “2029
Notes”). In connection with the offering, the company entered into
private placement purchase agreements with the several purchasers,
each of whom is a “qualified institutional buyer” within the
meaning of Rule 144A promulgated under the Securities Act of 1933,
as amended (the “Securities Act”). The closing of the offering is
subject to customary closing conditions and is expected to take
place on March 12, 2024.
The 2029 Notes will represent senior unsecured
obligations of the company and will accrue interest payable
semiannually in arrears on March 1 and September 1 of each year,
beginning on September 1, 2024. The notes will mature on March 1,
2029, unless earlier converted or repurchased.
Before September 1, 2028, holders will have the
right to convert their 2029 Notes only upon the satisfaction of
specified conditions and during certain periods. On or after
September 1, 2028 until the close of business on the second
scheduled trading day immediately preceding the maturity date,
holders may convert all or any portion of their 2029 Notes at any
time. Upon conversion, the company will pay or deliver, as the case
may be, cash, shares of its common stock or a combination of cash
and shares of its common stock, at its election. The conversion
rate for the 2029 Notes will initially be 101.1250 shares of the
company’s common stock per $1,000 principal amount of notes
(equivalent to an initial conversion price of approximately $9.89
per share of the company’s common stock). The initial conversion
price represents a premium of approximately 12.5% over the last
reported sale price of $8.79 per share of the company’s common
stock on March 6, 2024. The conversion rate will be subject to
adjustment in some events but will not be adjusted for any accrued
or unpaid interest.
The 2029 Notes are not redeemable and no sinking
fund is provided for the 2029 Notes. If the company undergoes a
“fundamental change” (as defined in the indenture that will govern
the 2029 Notes), then, subject to certain conditions and limited
exceptions, holders may require the company to repurchase for cash
all or any portion of their 2029 Notes at a fundamental change
repurchase price equal to 100% of the principal amount of the 2029
Notes to be repurchased, plus accrued and unpaid interest to, but
excluding, the fundamental change repurchase date. In addition,
following certain corporate events that occur prior to the maturity
date, the company will, in certain circumstances, increase the
conversion rate for a holder who elects to convert its 2029 Notes
in connection with such a corporate event.
The company expects to use the net proceeds from
the Offering (i) to repurchase for cash a portion of its 1.250%
Exchangeable Senior Notes due 2026 (the “2026 Notes”) in privately
negotiated transactions from certain noteholders and (ii) to the
extent there are 2026 Notes outstanding after such repurchase, to
repay in full any remaining outstanding 2026 Notes by depositing
the required payoff amount with the trustee under the indenture of
the 2026 Notes.
The 2029 Notes and any shares of the company’s
common stock issuable upon conversion of the 2029 Notes have not
been and will not be registered under the Securities Act, any state
securities laws or the securities laws of any other jurisdiction,
and unless so registered, may not be offered or sold in the United
States absent registration or an applicable exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and other applicable securities laws.
This press release is neither an offer to sell
nor a solicitation of an offer to buy any of these securities nor
shall there be any sale of these securities in any state or
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to the registration or qualification thereof under
the securities laws of any such state or jurisdiction. Further,
this press release is not an offer to repurchase the 2026 Notes. As
described in the Current Report on Form 8-K filed by the company on
March 6, 2024, all of the 2026 Notes have been accelerated and
became due and payable pursuant to an acceleration notice the
company received from a holder of the 2026 Notes on February 29,
2024.
Forward-Looking Statements
Statements in this press release, which are not
purely historical, including statements regarding the timing, size
and expected completion of the offering of 2029 Notes, the expected
unwind of the company’s capped call transactions with respect to
the 2026 Notes, the use of proceeds from the offering, and other
statements that are not statements of historical fact, are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The forward-looking
statements involve risks and uncertainties which could cause actual
results to differ materially from those expressed or implied by
such forward-looking statements, including, but not limited to,
those related to market and other conditions; the risk that the
conditions to the closing of the proposed offering are not
satisfied; and other risks and uncertainties that are described in
the Risk Factors section of our annual report on Form 10-K for
the fiscal year ended April 30, 2023, as well as any updates to
these risk factors filed from time to time in our other filings
with the Securities and Exchange Commission. We caution investors
not to place undue reliance on the forward-looking statements
contained in this press release, and we disclaim any obligation,
and do not undertake, to update or revise any forward-looking
statements in this press release except as may be required by
law.
Contacts:
Stephanie Diaz (Investors)
Vida Strategic Partners
415-675-7401
sdiaz@vidasp.com
Tim Brons (Media)
Vida Strategic Partners
415-675-7402
tbrons@vidasp.com
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