ANI Pharmaceuticals, Inc. Closes $316.25 Million Convertible Senior Notes Offering Including Full Exercise of Initial Purchasers’ Option to Purchase Additional Notes

Rhea-AI Summary

ANI Pharmaceuticals has successfully closed its offering of $316.25 million in 2.25% convertible senior notes due 2029. The offering, initially set at $250 million, was upsized to $275 million with an additional $41.25 million exercised by initial purchasers. Net proceeds are approximately $306.8 million. ANI plans to use $40.6 million for capped call transactions and the remainder to repay its existing senior secured term loan facility. The company also entered a new senior secured credit agreement with a $325 million delayed draw term loan facility and a $75 million revolving facility. The capped call transactions are expected to reduce potential dilution and offset potential cash payments upon note conversion.

Positive

• Successfully raised $316.25 million through convertible senior notes offering
• Upsized offering from $250 million to $275 million due to high investor demand
• Net proceeds of approximately $306.8 million after discounts and commissions
• Entered new senior secured credit agreement with $325 million delayed draw term loan and $75 million revolving facility
• Implemented capped call transactions to potentially reduce dilution and offset cash payments upon note conversion

Negative

• Increased debt obligation with $316.25 million in convertible senior notes
• Potential dilution of common stock if notes are converted
• Approximately $40.6 million of proceeds allocated to capped call transactions instead of operations or debt repayment

Insights

Financial Analyst

ANI Pharmaceuticals' successful closing of a $316.25 million convertible senior notes offering marks a significant financial move. The upsized offering and full exercise of the initial purchasers' option indicate strong investor demand. With a 2.25% interest rate and 5-year maturity, these notes provide ANI with relatively low-cost capital. The company's strategic use of $40.6 million for capped call transactions is a prudent move to mitigate potential dilution. The remaining proceeds will refinance existing debt, potentially improving ANI's capital structure. However, investors should note the potential dilution risk if ANI's stock price exceeds the $114.02 cap price. Overall, this transaction strengthens ANI's financial position, providing flexibility for future growth initiatives.

Legal Expert

The private placement of convertible notes to qualified institutional buyers under Rule 144A exempts ANI from SEC registration requirements, streamlining the process. However, this limits the notes' liquidity and transferability. The implementation of capped call transactions is a savvy legal strategy to manage potential dilution, but it's important to monitor compliance with anti-dilution provisions. The concurrent termination of the existing credit agreement and establishment of a new $400 million facility ($325 million term loan and $75 million revolving) suggests a comprehensive refinancing strategy. Investors should be aware that while this offering provides financial flexibility, it also introduces new contractual obligations and potential conversion scenarios that could impact shareholder value.

PRINCETON, N.J., Aug. 13, 2024 (GLOBE NEWSWIRE) -- ANI Pharmaceuticals, Inc. (ANI or the Company) (Nasdaq: ANIP) today announced the closing of its offering of $316,250,000 aggregate principal amount of 2.25% convertible senior notes due 2029 (the “notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). In response to investor demand, ANI upsized the initial offering of $250,000,000 aggregate principal amount of notes to $275,000,000 and the initial purchasers fully exercised their option to purchase an additional $41,250,000 aggregate principal amount of the notes. The notes were issued pursuant to, and are governed by, an indenture, dated as of August 13, 2024, between the Company and U.S. Bank Trust Company, National Association, as trustee.

The net proceeds from the offering are approximately $306.8 million, after deducting the initial purchasers’ discounts and commissions but before deducting ANI’s estimated offering expenses. ANI intends to use approximately $40.6 million of the net proceeds to fund the cost of entering into the capped call transactions described below. ANI intends to use the remainder of the net proceeds from the offering, together with cash on hand, to repay in full ANI’s existing senior secured term loan facility. Substantially concurrently with repayment of the existing senior secured term loan facility, the commitments under the existing senior secured credit agreement (which includes the senior secured term loan facility and a revolving facility) were terminated and the Company entered into a new senior secured credit agreement consisting of a $325,000,000 delayed draw term loan facility and a $75,000,000 revolving facility.

In connection with the pricing of the notes and the exercise by the initial purchasers of their option to purchase additional notes, ANI entered into privately negotiated capped call transactions with certain financial institutions. The capped call transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the notes, the number of shares of ANI’s common stock underlying the notes.  The cap price of the capped call transactions is initially $114.02 per share, which represents a premium of 100% over the last reported sale price of ANI’s common stock of $57.01 per share on the date the notes offering was priced, and is subject to certain adjustments under the terms of the capped call transactions.  The capped call transactions are expected generally to reduce the potential dilution to ANI’s common stock upon any conversion of the notes and/or offset any potential cash payments ANI is required to make in excess of the principal amount of converted notes, as the case may be, upon conversion of the notes. If, however, the market price per share of ANI’s common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions, there would nevertheless be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that such market price exceeds the cap price of the capped call transactions.

The notes were only offered and sold to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act. The offer and sale of the notes and any shares of common stock issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act or any other securities laws, and the notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes or any shares of common stock issuable upon conversion of the notes, nor will there be any sale of the notes or any such shares, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful.

About ANI Pharmaceuticals, Inc.

ANI Pharmaceuticals, Inc. (Nasdaq: ANIP) is a diversified biopharmaceutical company serving patients in need by developing, manufacturing, and marketing high-quality branded and generic prescription pharmaceutical products, including for diseases with high unmet medical need. ANI is focused on delivering sustainable growth by scaling up its Rare Disease business through its lead asset Purified Cortrophin® Gel, strengthening its Generics business with enhanced research and development capabilities, delivering innovation in Established Brands, and leveraging its U.S. based manufacturing footprint.

Forward-Looking Statements

This press release contains forward-looking statements. All statements other than statements of historical facts contained herein, including, without limitation, statements regarding the effects of entering into the capped call transactions described above, are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other important factors that may cause ANI’s actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the risks and uncertainties related to market conditions and satisfaction of customary closing conditions related to the offering and risks relating to ANI’s business, including those described in periodic reports that ANI files from time to time with the SEC. ANI may not consummate the offering described in this press release and, if the offering is consummated, cannot provide any assurances regarding its ability to effectively apply the net proceeds as described above. Any risks and uncertainties could materially and adversely affect ANI’s results of operations, which would, in turn, have a significant and adverse impact on ANI’s stock price. Any forward-looking statements contained in this press release speak only as of the date hereof, and ANI specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Investor Relations:
Lisa M. Wilson, In-Site Communications, Inc.
T: 212-452-2793
E: lwilson@insitecony.com

FAQ

What is the total amount of convertible senior notes issued by ANI Pharmaceuticals (ANIP)?

ANI Pharmaceuticals (ANIP) issued $316.25 million in aggregate principal amount of 2.25% convertible senior notes due 2029.

How much did ANI Pharmaceuticals (ANIP) receive in net proceeds from the notes offering?

ANI Pharmaceuticals (ANIP) received approximately $306.8 million in net proceeds from the convertible senior notes offering, after deducting initial purchasers' discounts and commissions.

What is the interest rate and maturity date of ANI Pharmaceuticals' (ANIP) convertible senior notes?

ANI Pharmaceuticals' (ANIP) convertible senior notes have an interest rate of 2.25% and are due in 2029.

How does ANI Pharmaceuticals (ANIP) plan to use the proceeds from the notes offering?

ANI Pharmaceuticals (ANIP) plans to use $40.6 million for capped call transactions and the remainder, along with cash on hand, to repay its existing senior secured term loan facility.

What new credit facilities did ANI Pharmaceuticals (ANIP) secure in August 2024?

In August 2024, ANI Pharmaceuticals (ANIP) entered a new senior secured credit agreement consisting of a $325 million delayed draw term loan facility and a $75 million revolving facility.