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The offering, which is directed to qualified institutional buyers, also includes an option for the initial purchasers to buy an additional $41.25 million in notes within a 13-day period starting from the issue date.
The notes are set to be general unsecured obligations of Tandem and will pay interest semiannually, starting September 15, 2024, until their maturity on March 15, 2029, unless they are converted, redeemed, or repurchased before that date.
Tandem anticipates net proceeds of approximately $266.3 million, or $306.4 million if the additional notes are fully purchased. These funds are intended to finance the cost of capped call transactions, repurchase a portion of its 1.50% Convertible Senior Notes due in 2025, and buy back approximately $30 million of its common stock in private transactions.
Holders of the new notes will have the right to convert their notes under certain conditions and during specific periods before December 15, 2028. The initial conversion rate is set at approximately 28.9361 shares of common stock per $1,000 principal amount of notes, which is about a 27.5% premium over Tandem’s common stock price as of March 5, 2024.
Tandem has the option, but not the obligation, to redeem the notes for cash in whole or in part after March 22, 2027, under certain conditions. If the company undergoes a fundamental change, note holders may require Tandem to repurchase their notes at the principal amount plus accrued interest.
In association with the note pricing, Tandem has entered into capped call transactions intended to reduce potential dilution from the conversion of the notes. The option counterparties may engage in transactions that could affect the company’s common stock price.
The sale of the notes is expected to finalize on March 8, 2024, subject to customary closing conditions. The notes and any common stock issued upon conversion will not be registered under the Securities Act and will be offered under an exemption from registration requirements.
This news is based on a press release statement from Tandem Diabetes Care, Inc.
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