On December 12, 2019 Ionis Pharmaceuticals, Inc. (Nasdaq: IONS) ("Ionis") reported that it has entered into privately negotiated exchange and/or subscription agreements, with certain holders of its outstanding 1.00% Convertible Senior Notes due 2021 (the "2021 Notes") and certain new investors pursuant to which Ionis will issue $398.0 million principal amount of 0.125% Convertible Senior Notes due 2024 (the "New Notes") in exchange for $340.2 principal amount of the 2021 Notes (the "Exchange Transactions") and issue $109.5 million principal amount of New Notes for cash (the "Subscription Transactions") (Press release, Ionis Pharmaceuticals, DEC 12, 2019, View Source;300973802.html [SID1234552335]). Following the closing of the Exchange Transactions, $344.8 million in aggregate principal amount of 2021 Notes will remain outstanding with terms unchanged. The Exchange Transactions and the Subscription Transactions are expected to close concurrently on or about December 19, 2019, subject to customary closing conditions.
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The New Notes will represent senior unsecured obligations of Ionis and will pay interest semi-annually in arrears on each June 15 and December 15, commencing on June 15, 2020, at a rate of 0.125% per annum. The New Notes will mature on December 15, 2024, unless earlier converted or repurchased. The New Notes will be convertible at the option of the holders in certain circumstances into cash, shares of Ionis’ common stock or a combination of cash and Ionis’ common stock, at Ionis’ election. The initial conversion rate is 12.0075 shares of Ionis’ common stock per $1,000 principal amount of New Notes, which is equivalent to an initial conversion price of approximately $83.28 per share, and will be subject to customary anti-dilution adjustments. Ionis may not redeem the New Notes prior to the maturity date.
Ionis will not receive any cash proceeds from the Exchange Transactions. In exchange for issuing the New Notes pursuant to the Exchange Transactions, Ionis will receive and cancel the exchanged 2021 Notes. Ionis estimates that net cash proceeds from the Subscription Transactions will be approximately $99.2 million after deducting estimated offering expenses for both the Exchange Transactions and the Subscription Transactions. Ionis intends to use net cash proceeds from the Subscription Transactions to pay the cost of the convertible note hedge transaction described below and for general corporate purposes.
In connection with the exchange and/or subscription agreements, Ionis entered into convertible note hedge and warrant transactions with several financial institutions. These transactions may decrease or increase dilution of Ionis’ stock based on several factors that are outlined in further detail in the Company’s 8-K filing, which was filed contemporaneously with this press release.
The New Notes and any shares of common stock issuable upon conversion of the New Notes have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration under, or an applicable exemption from, the registration requirements. This announcement does not constitute an offer to sell, nor is it a solicitation of an offer to buy, these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state or any jurisdiction.