BridgeBio Pharma, Inc., a biopharmaceutical company focused on developing treatments for genetic diseases, announced plans to advance its long-term balance sheet strategy through a significant new financing initiative. The company disclosed that it intends to offer $550 million in aggregate principal amount of convertible senior notes due 2033 in a private placement, subject to market conditions and other customary factors. The offering will be made to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.
In connection with the proposed transaction, BridgeBio expects to grant the initial purchasers of the notes an option to acquire up to an additional $82.5 million in aggregate principal amount. If fully exercised, this option would increase the total size of the offering and provide the company with additional flexibility as it executes its broader capital and debt management plans.
According to the announcement, the primary purpose of the offering is to proactively address upcoming debt maturities. BridgeBio intends to use the net proceeds to repurchase, settle future conversion obligations related to, or repay at maturity a portion of its outstanding 2.50% convertible senior notes due 2027. These actions are expected to take place on or before the maturity date of the 2027 notes. Any remaining proceeds may be used for general corporate purposes, including working capital, capital expenditures, or other debt repayment needs.
The company emphasized that there can be no assurance regarding how much of the 2027 notes will ultimately be repurchased using proceeds from the new offering. The timing, structure, and terms of any such transactions will depend on market conditions and other factors. Importantly, the announcement clarified that the press release does not constitute an offer to purchase the 2027 notes.
In addition to addressing its debt profile, BridgeBio also outlined a related equity transaction designed to complement the notes offering. The company plans to use up to $82.5 million of cash on hand to repurchase shares of its common stock from certain purchasers of the convertible notes. These share repurchases are expected to be conducted through privately negotiated transactions facilitated by one or more of the initial purchasers or their affiliates, and are anticipated to occur concurrently with the pricing of the notes.
The purchase price for the repurchased shares is expected to equal the last reported sale price of BridgeBio’s common stock on the Nasdaq Global Select Market on the date the notes are priced. The company noted that these repurchases could influence the trading price of its common stock around the time of the offering. Such market activity could increase, or reduce the size of any decrease in, the stock price and may result in a higher effective conversion price for the notes. However, BridgeBio cautioned that it cannot predict the extent of these effects or their overall impact on the trading prices of either the notes or the common stock.
The final terms of the convertible senior notes, including the interest rate, initial conversion rate, and other key provisions, will be determined at the time of pricing. Once issued, the notes will bear interest payable semi-annually and are scheduled to mature on February 1, 2033, unless they are earlier converted, redeemed, or repurchased. Prior to November 1, 2032, the notes will be convertible only upon the satisfaction of specified conditions and during certain periods. After that date, holders will have the right to convert the notes at any time until shortly before maturity.
Holders may elect to convert their notes into cash, shares of BridgeBio common stock, or a combination of cash and shares, with the form of settlement determined at the company’s discretion. This flexibility allows BridgeBio to manage potential dilution while preserving optionality depending on its financial position and market conditions at the time of conversion.
The notes will not be redeemable by the company prior to February 6, 2030. Beginning on that date and continuing until shortly before maturity, BridgeBio may redeem some or all of the notes for cash if specific conditions are met, including if the company’s stock price exceeds 130% of the conversion price for a defined period. Any redemption would be made at 100% of the principal amount, plus accrued and unpaid interest up to, but excluding, the redemption date. Additionally, noteholders will have the right to require BridgeBio to repurchase their notes at par plus accrued interest upon the occurrence of certain fundamental events.
From a capital structure perspective, the notes will be senior unsecured obligations. They will rank senior to any indebtedness that is expressly subordinated, equal to other unsubordinated unsecured debt, effectively junior to secured indebtedness to the extent of the collateral securing such debt, and structurally junior to liabilities at the subsidiary level.
Finally, the company reiterated that the notes and any shares issuable upon conversion will not be registered under federal or state securities laws and may only be offered or sold in transactions that are exempt from registration requirements. The announcement underscored that it does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction where such actions would be unlawful.
Overall, the proposed offering reflects BridgeBio’s continued efforts to actively manage its capital structure, extend its debt maturities, and maintain financial flexibility as it advances its portfolio of genetic disease programs.
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