On April 14, 2020 Coherus BioSciences, Inc. ("Coherus" or the "Company", Nasdaq: CHRS), reported its intention to offer, subject to market and other conditions, $200,000,000 aggregate principal amount of convertible senior subordinated notes due 2026 (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") (Press release, Coherus Biosciences, APR 14, 2020, View Source [SID1234556290]). Coherus also expects to grant the initial purchasers of the notes an option to purchase, for settlement within a period of 13 days from, and including, the date notes are first issued, up to an additional 30,000,000 principal amount of notes.
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The notes will be general unsecured obligations of Coherus, and will be subordinated to the Coherus’ designated senior indebtedness. The notes will accrue interest payable semi-annually in arrears and will mature on April 15, 2026, unless earlier repurchased or converted. At any time before the close of business on the second scheduled trading day immediately before the maturity date, noteholders may convert their notes at their option into shares of Coherus’ common stock, together, if applicable, with cash in lieu of any fractional share, at the then-applicable conversion rate. The notes will not be redeemable at Coherus’ election before maturity. The interest rate, initial conversion rate and other terms of the notes will be determined at the pricing of the offering.
Coherus intends to use a portion of the net proceeds from the offering to fund the cost of entering into the capped call transactions described below. Coherus intends to use the remainder of the net proceeds from the offering for opportunistic pipeline acquisitions or licenses, working capital, and other general corporate purposes, which may include other debt repayment in the future. Coherus has not entered into any agreements or commitments with respect to any material acquisitions or licenses at this time. If the initial purchasers exercise their option to purchase additional notes, then Coherus intends to use a portion of the additional net proceeds to fund the cost of entering into additional capped call transactions as described below.
In connection with the offering of the notes, Coherus expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers or their respective affiliates and/or other financial institutions (the "option counterparties"). If the initial purchasers exercise their option to purchase additional notes, Coherus expects to enter into additional capped call transactions with the option counterparties.
In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to Coherus’ common stock and/or purchase shares of Coherus’ common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of Coherus’ common stock or the notes at that time.
In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Coherus’ common stock and/or purchasing or selling Coherus’ common stock or other securities of Coherus in secondary market transactions following the pricing of the notes and prior to the maturity of the notes. This activity could also cause or avoid an increase or decrease in the market price of Coherus’ common stock or the notes, which could affect the value of Coherus’ common stock that noteholders will receive upon conversion of the notes.
The offer and sale of the notes and the 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 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 the shares of common stock issuable upon conversion of the notes, nor will there be any sale of the notes or such shares, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful.