On June 26, 2023 Pacific Biosciences of California, Inc. ("PacBio") (NASDAQ: PACB) reported that it has entered into a privately negotiated exchange agreement with a holder of PacBio’s outstanding 1.50% Convertible Senior Notes due 2028 (the "2028 Notes"), pursuant to which PacBio will issue $441 million principal amount of its 1.375% Convertible Senior Notes due 2030 (the "New Notes") in exchange for $441 million principal amount of the 2028 Notes (the "Exchange Transaction"), in a transaction exempt from registration under the Securities Act of 1933, as amended, and the rules and regulations thereunder (Press release, Pacific Biotech, JUN 26, 2023, View Source;301861431.html [SID1234632914]). The Exchange Transaction is expected to close on or about June 30, 2023, subject to customary closing conditions.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"In 2021, we issued $900 million in convertible notes due in 2028, enabling us to scale the company for growth. By exchanging a portion of these notes, we have extended the duration of our debt, and with our plans to achieve positive cash flows during 2026, this further strengthens our financial position and gives us greater flexibility," said Christian Henry, President and Chief Executive Officer of PacBio. "This exchange agreement comes at an opportune time as we bring some of the most innovative sequencing solutions to the market."

The New Notes will have an initial conversion rate of 46.5116 shares of PacBio’s common stock ("common stock") per $1,000 principal amount of the New Notes (which is equal to an initial conversion price of approximately $21.50 per share of common stock), subject to customary anti-dilution and other adjustments. The Notes will mature on December 15, 2030, unless earlier repurchased, redeemed or converted. The Notes will pay interest semi-annually on each June 15 and December 15, commencing on December 15, 2023, at a rate of 1.375% per annum. Upon conversion, the Company will have the right to elect settlement in cash, shares of common stock or any combination thereof in its sole discretion.

In exchange for issuing the New Notes pursuant to the Exchange Transaction, PacBio will receive and cancel the exchanged 2028 Notes. Following the closing of the Exchange Transaction, $459 million in aggregate principal amount of 2028 Notes will remain outstanding with terms unchanged.

Additional information regarding this announcement may be found in a Current Report on Form 8-K that the Company intends to file today with the U.S. Securities and Exchange Commission.

Goldman Sachs & Co. LLC acted as exclusive financial advisor to PacBio in connection with the Exchange Transaction.