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InterMune, Inc. (Nasdaq: ITMN) has agreed to sell an aggregate of $105,000,000 principal amount of its 2.50% convertible senior notes due 2017 and 13,500,000 shares of its common stock at a price to the public of $9.90 per share in concurrent underwritten public offerings. InterMune has granted the underwriters 30-day options to purchase up to an additional $15,750,000 aggregate principal amount of convertible senior notes and up to an additional 2,025,000 shares of common stock in connection with the offerings. InterMune estimates aggregate net proceeds from the concurrent offerings to be approximately $228.1 million (assuming no exercise of the underwriters’ options to purchase additional convertible senior notes and shares of common stock), after deducting underwriting discounts and commissions and estimated offering expenses. InterMune currently intends to use the net proceeds from the offerings to repay at maturity or earlier repurchase its outstanding 5.00% convertible senior notes due 2015. The Company currently has received commitments from certain holders of the outstanding 5.00% convertible senior notes to allow the Company to repurchase approximately $50 million of the 2015 notes. Proceeds from the offerings may also be used to fund the commercialization of Esbriet® (pirfenidone), to fund InterMune’s ASCEND trial and for general corporate purposes, which may include funding research and development, and working capital. InterMune may also use a portion of the net proceeds for capital expenditures or for acquisitions or investments in complementary businesses, products and technologies.
The convertible senior notes will bear interest at a rate of 2.50% per year, payable on June 15 and December 15 of each year, commencing on June 15, 2013. The convertible senior notes will mature on December 15, 2017. Upon conversion, holders of the convertible senior notes may receive cash, shares of InterMune’s common stock or a combination of cash and shares of InterMune’s common stock, at InterMune’s election. If InterMune undergoes a “fundamental change” (as defined in the prospectus supplement relating to the convertible senior notes), holders of the convertible senior notes will have the option to require InterMune to repurchase all or any portion of their notes at 100% of par, plus accrued and unpaid interest up to, but not including, the repurchase date.
Holders may convert their notes at their option prior to the close of business on the business day immediately preceding September 15, 2017, but only under certain circumstances. On or after September 15, 2017 until the close of business on the second scheduled trading day prior to the maturity date, holders may convert their notes at any time. The initial conversion rate for each $1,000 aggregate principal amount of convertible senior notes is 77.7001 shares of common stock, equivalent to a conversion price of approximately $12.87 per share, which represents a premium of approximately 30% to the public offering price of InterMune’s shares in the concurrent common stock offering.
On or after June 20, 2015, InterMune may redeem for cash all or part of the convertible senior notes at 100% of par (plus accrued and unpaid interest up to, but not including, the redemption date) if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for 20 or more trading days in a period of 30 consecutive trading days ending within the 10 trading days immediately prior to the date of the redemption notice.
Goldman, Sachs & Co. and J. P. Morgan Securities LLC are acting as joint book-running managers of these offerings. Canaccord Genuity, Inc., Leerink Swann LLC, Wells Fargo Securities, LLC and William Blair & Company, L.L.C. are acting as co-managers of the common stock offering.
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