Collegium Pharmaceutical, Inc. Announces Redemption of Outstanding 2.625% Convertible Senior Notes Due 2026
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Insights
Collegium Pharmaceutical's decision to redeem its 2.625% Convertible Senior Notes before maturity is a strategic financial move. This action indicates the company's confidence in its liquidity and capital management strategy. By redeeming these notes, Collegium is likely to reduce future interest expenses, which can have a positive effect on their net income and potentially their stock price. It's essential to analyze the company's cash flow statements and balance sheets to assess the impact of this redemption on its financial health.
Furthermore, the redemption trigger, tied to the company's stock price exceeding 130% of the conversion price, suggests strong market performance and investor confidence. However, investors should be aware of the opportunity cost, as the capital used for redemption could have been invested in growth or innovation. This move also alters the capital structure, reducing debt and potentially diluting equity if the notes were converted instead of redeemed.
The redemption of convertible notes can signal a company's transition from a growth phase, where debt financing is more common, to a more mature phase of its lifecycle. In the case of Collegium Pharmaceutical, the market will likely interpret this redemption as a sign of robust financial positioning, which can attract a different investor base. The effect on the stock market will depend on the investors' interpretations of the company's long-term growth prospects versus the immediate financial benefits of reduced interest payments.
It's also noteworthy that the conversion rate increase due to the 'Make-Whole Fundamental Change' could have incentivized note holders to convert rather than wait for redemption, affecting the number of shares in circulation. Investors should monitor the company's disclosures and market reactions closely to gauge the full impact of these financial maneuvers.
From a legal standpoint, the adherence to the terms set in the indenture agreement is critical. Collegium Pharmaceutical's compliance with Section 4.03(B) of the indenture by redeeming the notes when their stock price exceeded the specified threshold demonstrates corporate governance and respect for contractual obligations. Investors should appreciate that the company is managing its legal and financial obligations responsibly, which is indicative of sound management practices.
Additionally, the clear communication of the redemption process and the conversion option available to note holders until the specified deadline provides transparency. This adherence to legal protocols in financial transactions can bolster investor confidence in the company's management and might reflect positively on the company's reputation and stock value.
STOUGHTON, Mass., April 11, 2024 (GLOBE NEWSWIRE) -- Collegium Pharmaceutical, Inc. (Nasdaq: COLL) (the “Company”), a leading, diversified specialty pharmaceutical company committed to improving the lives of people living with serious medical conditions, today announced that it has called all
The redemption price will be payable in cash and equal to
Payment of the Redemption Price will be made upon presentation and surrender of the Notes to The Bank of New York Mellon Trust Company, N.A. (“BNYMTC”), in its capacity as paying agent under the Indenture (the “Paying Agent”), at the following address: The Bank of New York Mellon Trust Company, N.A., 2001 Bryan Street, 10th Floor, Dallas, Texas 75201, Attention: Transfers/Redemption/Payments. Notes held through The Depository Trust Company (“DTC”) should be presented and surrendered for redemption in accordance with DTC’s policies and procedures therefor.
On the Redemption Date, the Redemption Price will become due and payable upon each Note to be redeemed. Unless the Company defaults in making the payment of the Redemption Price, on and after the Redemption Date interest on the Notes will cease to accrue and the only remaining right of the holders of the Notes will be the right to receive the Redemption Price upon surrender of the Notes to be redeemed to the Paying Agent.
Holders of the Notes may surrender Notes to BNYMTC, in its capacity as conversion agent under the Indenture (the “Conversion Agent”), for conversion in accordance with the Indenture until immediately prior to 5:00 p.m. (New York City time) on the business day immediately before the Redemption Date (or, if the Company fails to pay the Redemption Price due on the Redemption Date in full, at any time until such time as the Company pays such Redemption Price in full) (the “Conversion Deadline”). The Company has elected to settle any such conversions of Notes in cash in accordance with the Indenture. The Conversion Agent’s address is: The Bank of New York Mellon Trust Company, N.A., 2322 French Settlement, Bldg 100 Dallas, TX 75212.
The sending of the notice of redemption to the holders of the Notes constituted a “Make-Whole Fundamental Change” under the Indenture, and therefore the conversion rate was required to be increased in accordance with the terms of the Indenture. The conversion rate reflecting such increase is 36.7815 shares of Common Stock per
This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful. No representation is made as to the correctness or accuracy of the CUSIP or ISIN numbers either as printed on the Notes or as contained in this press release.
About Collegium Pharmaceutical, Inc.
Collegium is a leading, diversified specialty pharmaceutical company committed to improving the lives of people living with serious medical conditions. Collegium’s headquarters are located in Stoughton, Massachusetts. For more information, please visit the Company’s website at www.collegiumpharma.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. We may, in some cases, use terms such as “predicts,” “forecasts,” “believes,” “potential,” “proposed,” “continue,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “could,” “might,” “should” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Examples of forward-looking statements contained in this press release include, among others, statements related to our payment of the Redemption Price on the Redemption Date and other statements that are not historical facts. Such statements are subject to numerous important factors, risks and uncertainties that may cause actual events or results, performance, or achievements to differ materially from the Company’s current expectations. These risks include, but are not limited to, the risks described under the heading “Risk Factors” in the Company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and its other filings with the Securities and Exchange Commission. Any forward-looking statements that the Company makes in this press release speak only as of the date of this press release. The Company assumes no obligation to update its forward-looking statements whether as a result of new information, future events or otherwise, after the date of this press release.
Investor Contact:
Christopher James, M.D.
Vice President, Investor Relations
ir@collegiumpharma.com
Media Contact:
Marissa Samuels
Vice President, Corporate Communications
communications@collegiumpharma.com
FAQ
What is the aggregate principal amount of the Convertible Senior Notes Due 2026 being redeemed by Collegium Pharmaceutical, Inc.?
When is the Redemption Date for the Notes announced by Collegium Pharmaceutical, Inc.?
What is the Redemption Price per $1,000 principal amount of Notes called for redemption by Collegium Pharmaceutical, Inc.?
What triggers the redemption of the Notes by Collegium Pharmaceutical, Inc.?
Where should Notes held through The Depository Trust Company (DTC) be presented and surrendered for redemption according to Collegium Pharmaceutical, Inc.?
