On March 4, 2020 BridgeBio Pharma, Inc. (Nasdaq: BBIO) (the "Company," "we" or "BridgeBio") reported the pricing of $475 million aggregate principal amount of 2.50% convertible senior notes due 2027 (the "notes") in a private offering (the "offering") to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") (Press release, BridgeBio, MAR 4, 2020, View Source [SID1234556927]). The offering was upsized from the previously announced offering of $350 million aggregate principal amount of notes. In connection with the offering, the Company granted the initial purchasers an option to purchase up to an additional $75 million aggregate principal amount of notes.

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The notes will bear interest at a rate of 2.50% per year, payable semi-annually in arrears on March 15 and September 15 of each year, beginning September 15, 2020. The notes will mature on March 15, 2027, unless earlier converted or repurchased in accordance with their terms. Prior to December 15, 2026, the notes will be convertible only upon satisfaction of certain conditions and during certain periods. Thereafter, the notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

The notes will be convertible at the option of holders, subject to certain conditions and during certain periods, into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, with the form of consideration determined at the Company’s election. Holders of the notes will have the right to require the Company to repurchase all or a portion of their notes at 100% of their principal amount, plus any accrued and unpaid interest, upon the occurrence of certain events. The conversion rate will initially be 23.4151 shares of the Company’s common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $42.71 per share of the Company’s common stock). The initial conversion price of the notes represents a premium of approximately 37.5% over the last reported sale price of the Company’s common stock of $31.06 per share on March 4, 2020. The sale of the notes is expected to close on March 9, 2020, subject to customary closing conditions.

When issued, the notes will be the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s unsecured indebtedness that is expressly subordinated in right of payment to the notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

In connection with the pricing of the notes, the Company entered into privately negotiated capped call transactions with certain of the initial purchasers and/or their respective affiliates or other financial institutions (the "option counterparties"). These capped call transactions are expected generally to reduce the potential dilution to the Company’s common stock upon any conversion of the notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction of potential dilution and/or offset of cash payments subject to a cap. The cap price of the capped call transactions will initially be $62.12 per share, which represents a premium of 100% over the last reported sale price of the Company’s common stock of $31.06 per share on March 4, 2020, and is subject to certain adjustments under the terms of the capped call transactions.

The Company has been advised that, 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 the Company’s common stock concurrently with or shortly after the pricing of the notes and/or purchase shares of the Company’s 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 the Company’s 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 the Company’s common stock and/or purchasing or selling the Company’s common stock or other securities of the Company in secondary market transactions from time to time prior to maturity of the notes (and are likely to do so following any conversion of the notes or any repurchase of the notes by the Company on any fundamental change repurchase date, in each case, if the Company exercises the relevant election under the capped call transactions). This activity could also cause or avoid an increase or a decrease in the market price of the Company’s common stock or the notes, which could affect the ability of holders to convert the notes and, to the extent the activity occurs during any observation period related to a conversion of the notes, it could affect the number of shares of the Company’s common stock, if any, and value of the consideration that holders will receive upon conversion of the notes.

Further, if any such capped call transactions fail to become effective, whether or not the offering of notes is completed, the option counterparties or their respective affiliates may unwind their hedge positions with respect to the Company’s common stock, which could adversely affect the value of the Company’s common stock and, if the notes have been issued, the value of the notes.

The Company estimates that the net proceeds from the offering of notes will be approximately $463.7 million (or approximately $537.0 million if the initial purchasers exercise their option to purchase additional notes in full), after deducting the initial purchaser’s discounts and estimated offering expenses payable by the Company. The Company expects to use approximately $42.6 million of the net proceeds from the offering of the notes to pay the cost of the capped call transactions, and approximately $75.0 million of the net proceeds to repurchase shares of its common stock concurrently with the closing of the offering from certain purchasers of the notes in privately negotiated transactions entered into through one or more of the initial purchasers or an affiliate thereof concurrently with the pricing of the notes (such transactions, the "share repurchases"). The agreed to purchase price per share of the Company’s common stock in such repurchases is equal to the last reported sale price of the Company’s common stock of $31.06 per share on March 4, 2020. The share repurchases could increase (or reduce the size of any decrease in) the market price of the Company’s common stock or the notes. If the initial purchasers exercise their option to purchase additional notes in full, the Company expects to use approximately $6.7 million of the net proceeds from the sale of such additional notes to enter into additional capped call transactions. The Company intends to use the remainder of the net proceeds for working capital and other general corporate purposes, including for our commercial organization and launch preparations. The Company may also use any remaining net proceeds to fund possible acquisitions of, or investments in, complementary businesses, products, services and technologies. The Company has not entered into any agreements or commitments with respect to any material acquisitions or investments at this time. These expectations are subject to change.

The notes and the common stock issuable upon conversion of the notes, if any, are not being registered under the Securities Act, or the securities laws of any other jurisdiction. The notes and the common stock issuable upon conversion of the notes, if any, may not be offered or sold in the United States except in transactions exempt from, or not subject to, the registration requirements of the Securities Act and any applicable state securities laws.

This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.