TAMPA, Fla. - Pacira BioSciences, Inc. (NASDAQ:PCRX), a pharmaceutical company specializing in non-opioid pain management, has launched a private placement of $250 million in convertible senior notes due in 2029. The offering is directed exclusively at qualified institutional buyers according to Rule 144A under the Securities Act of 1933.
The transaction, which is expected to close on Monday, subject to standard closing conditions, includes an option for the initial purchasers to acquire an additional $37.5 million in notes within 13 days of issuance.
Pacira anticipates net proceeds of approximately $242 million, or $278.4 million if the additional notes are purchased. These funds, after initial purchaser discounts, commissions, and estimated expenses, are earmarked for several strategic financial actions.
Pacira plans to allocate roughly $191.4 million to repurchase $200 million of its 0.750% Convertible Senior Notes due in 2025. Moreover, around $23.2 million will fund capped call transactions, which are financial instruments designed to minimize the dilution from the conversion of the new notes.
Approximately $25 million of the proceeds will go towards repurchasing 837,240 shares of Pacira's common stock. The remaining funds will support general corporate purposes, including working capital and research and development expenditures.
The new notes will accrue interest at 2.125% per year, with semi-annual payments starting November 15, 2024, and will mature on May 15, 2029, unless repurchased, redeemed, or converted earlier. Initially, the notes are convertible into Pacira common stock at a rate of 25.2752 shares per $1,000 principal amount, which equates to a conversion price of approximately $39.56 per share. This price represents a 32.5% premium over Pacira's common stock closing price on May 9, 2024.
Pacira also entered into capped call transactions with an initial cap price of $53.75 per share, an 80% premium over the May 9 closing price. These transactions are expected to reduce potential dilution or offset potential cash payments upon conversion of the notes.
The market price of Pacira's common stock and the notes may be influenced by the capped call transactions and the repurchase activities. The notes offering and the potential conversion shares have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the U.S. without registration or an applicable exemption.
The information in this article is based on a press release statement from Pacira BioSciences.
InvestingPro Insights
Pacira BioSciences, Inc. (NASDAQ:PCRX) appears to be taking strategic steps to manage its financials amidst a challenging market environment. According to InvestingPro data, the company's market capitalization stands at a solid $1.39 billion, indicating a stable presence in the pharmaceutical sector.
With a Price/Earnings (P/E) ratio of 19.89 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 22.07, Pacira is priced above the industry average, which could signal investor confidence in its growth prospects.
InvestingPro Tips for Pacira highlight some positive signals, including an expected net income growth this year and three analysts who have revised their earnings upwards for the upcoming period. This optimism is further bolstered by the company's significant return over the last week, with a 9.74% price total return. Pacira's valuation implies a strong free cash flow yield, and its liquid assets exceed short-term obligations, suggesting financial flexibility and resilience.
For investors considering Pacira's convertible senior notes, these metrics may offer reassurance about the company's financial health. Moreover, with analysts predicting profitability for this year and the company having been profitable over the last twelve months, the outlook for Pacira's continued performance is encouraging. It is worth noting that Pacira does not pay a dividend, which could be a factor for income-focused investors to consider.
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