Tandem Diabetes Care, Inc. (NASDAQ: TNDM), a global insulin
delivery and diabetes technology company, announced today the
pricing of $275.0 million aggregate principal amount of 1.50%
Convertible Senior Notes due 2029 (the “notes”) in a private
placement (the “offering”) to persons reasonably believed to be
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). The
offering was upsized from the previously announced offering size of
$250.0 million aggregate principal amount of notes. Tandem also
granted the initial purchasers of the notes an option to purchase,
within the 13-day period beginning on, and including, the first
date on which the notes are issued, up to an additional $41.25
million aggregate principal amount of notes from Tandem. The sale
of the notes is expected to close on March 8, 2024, subject to
customary closing conditions.
The notes will be general unsecured obligations of Tandem and
will accrue interest payable semiannually in arrears on March 15
and September 15 of each year, beginning on September 15, 2024, at
a rate of 1.50% per year. The notes will mature on March 15, 2029,
unless earlier converted, redeemed or repurchased.
Tandem estimates that the net proceeds from the offering will be
approximately $266.3 million (or approximately $306.4 million if
the initial purchasers exercise their option to purchase additional
notes in full), after deducting the initial purchasers’ discounts
and commissions and estimated offering expenses payable by Tandem.
Tandem expects to use the net proceeds from the offering, together
with cash on hand, to (i) pay the approximately $13.8 million cost
of the capped call transactions that it entered into as described
below, (ii) repurchase for cash approximately $246.7 million in
aggregate principal amount of its 1.50% Convertible Senior Notes
due 2025 (the “2025 notes”) in privately negotiated transactions
entered into concurrently with the pricing of the notes in the
offering and (iii) repurchase approximately $30.0 million of common
stock in privately negotiated transactions entered into
concurrently with the pricing of the notes in the offering through
one of the initial purchasers or its affiliate from purchasers of
the notes in the offering. If the initial purchasers exercise their
option to purchase additional notes, Tandem expects to use a
portion of the net proceeds from the sale of the additional notes
to enter into additional capped call transactions and the remainder
for general corporate purposes, which may include additional
repurchases of the 2025 notes from time to time following the
offering, or the repayment at maturity, of the 2025 notes.
Before December 15, 2028, holders will have the right to convert
their notes only upon the satisfaction of specified conditions and
during certain periods. On or after December 15, 2028 until the
close of business on the second scheduled trading day immediately
preceding the maturity date, holders may convert all or any portion
of their notes at any time. Upon conversion, Tandem will pay or
deliver, as the case may be, cash, shares of its common stock or a
combination of cash and shares of its common stock, at its
election. The conversion rate for the notes will initially be
28.9361 shares of Tandem’s common stock per $1,000 principal amount
of notes (equivalent to an initial conversion price of
approximately $34.56 per share of Tandem’s common stock). The
initial conversion price represents a premium of approximately
27.5% over the last reported sale price of $27.105 per share of
Tandem’s common stock on March 5, 2024. The conversion rate will be
subject to adjustment in some events but will not be adjusted for
any accrued or unpaid interest.
Tandem may not redeem the notes prior to March 22, 2027. Tandem
may redeem for cash all or any portion of the notes (subject to
certain limitations), at its option, on or after March 22, 2027 if
the last reported sale price of Tandem’s common stock has been at
least 130% of the conversion price for the notes then in effect for
at least 20 trading days (whether or not consecutive) during any 30
consecutive trading day period (including the last trading day of
such period) ending on, and including, the trading day immediately
preceding the date on which Tandem provides notice of redemption at
a redemption price equal to 100% of the principal amount of the
notes to be redeemed, plus accrued and unpaid interest to, but
excluding, the redemption date. However, Tandem may not redeem less
than all of the outstanding notes unless at least $75.0 million
aggregate principal amount of notes are outstanding and not called
for redemption as of the time Tandem sends the related notice of
redemption. No sinking fund is provided for the notes.
If Tandem undergoes a “fundamental change” (as defined in the
indenture that will govern the notes), then, subject to certain
conditions and limited exceptions, holders may require Tandem to
repurchase for cash all or any portion of their notes at a
fundamental change repurchase price equal to 100% of the principal
amount of the notes to be repurchased, plus accrued and unpaid
interest to, but excluding, the fundamental change repurchase date.
In addition, following certain corporate events that occur prior to
the maturity date or if Tandem delivers a notice of redemption,
Tandem will, in certain circumstances, increase the conversion rate
for a holder who elects to convert its notes in connection with
such a corporate event or convert its notes called (or deemed
called) for redemption in connection with such notice of
redemption, as the case may be.
In connection with the pricing of the notes, Tandem entered into
privately negotiated capped call transactions with one or more of
the initial purchasers or their respective affiliates and certain
other financial institutions (the “option counterparties”). The
capped call transactions cover, subject to customary adjustments,
the number of shares of Tandem’s common stock initially underlying
the notes. The capped call transactions are expected to offset the
dilution to Tandem’s common stock as a result of any conversion of
the notes, with such offset subject to a cap. The cap price of the
capped call transactions relating to the notes will initially be
$42.0128, which represents a premium of approximately 55.0% over
the last reported sale price of Tandem’s common stock on the Nasdaq
Global Market on March 5, 2024, and is subject to certain
adjustments under the terms of the capped call transactions.
In connection with establishing their initial hedges of the
capped call transactions, Tandem expects that the option
counterparties or their respective affiliates will enter into
various derivative transactions with respect to Tandem’s common
stock and/or purchase shares of Tandem’s common stock concurrently
with or shortly after the pricing of the notes, including with, or
from, certain investors in the notes. This activity could increase
(or reduce the size of any decrease in) the market price of
Tandem’s common stock or the notes at that time.
In addition, Tandem expects that the option counterparties or
their respective affiliates may modify their hedge positions by
entering into or unwinding various derivatives with respect to
Tandem’s common stock and/or purchasing or selling shares of
Tandem’s common stock or other securities of Tandem in secondary
market transactions following the pricing of the notes and prior to
the maturity of the notes (and are likely to do so during the
observation period relating to any conversion of the notes on or
after December 15, 2028 that is not in connection with a
redemption, or, to the extent Tandem elects to unwind a portion of
the capped call transactions, following any repurchase, redemption,
exchange or early conversion of the notes). This activity could
also cause or avoid an increase or a decrease in the market price
of Tandem’s common stock or the notes, which could affect a
noteholder’s ability to convert its notes and, to the extent the
activity occurs following conversion or during any observation
period related to a conversion of notes, it could affect the amount
and value of the consideration that a noteholder will receive upon
conversion of such notes.
Concurrently with the pricing of the notes in the offering,
Tandem entered into privately negotiated transactions with certain
holders of the 2025 notes to repurchase, for approximately $246.1
million in cash, approximately $246.7 million aggregate principal
amount of its 2025 notes, excluding accrued and unpaid interest on
the 2025 notes, on terms negotiated with each holder (each, a "note
repurchase transaction"). This press release is not an offer to
repurchase the 2025 notes, and the offering of the notes is not
contingent upon the repurchase of the 2025 notes.
In connection with any note repurchase transaction, Tandem
expects that holders of the 2025 notes who agree to have their 2025
notes repurchased and who have hedged their equity price risk with
respect to such notes (the “hedged holders”) will unwind all or
part of their hedge positions by buying Tandem’s common stock
and/or entering into or unwinding various derivative transactions
with respect to Tandem’s common stock. The amount of Tandem’s
common stock to be purchased by the hedged holders or in connection
with such derivative transactions may have been substantial in
relation to the historical average daily trading volume of Tandem’s
common stock. This activity by the hedged holders could increase
(or reduce the size of any decrease in) the market price of
Tandem’s common stock, including concurrently with the pricing of
the notes, and may have resulted in a higher effective conversion
price of the notes.
Additionally, in connection with the issuance of the 2025 notes,
Tandem entered into capped call transactions (the “existing option
transactions”) with certain financial institutions (the “existing
option counterparties”). In connection with the note repurchase
transactions, Tandem entered into agreements with the existing
option counterparties to terminate a portion of the existing option
transactions in a notional amount corresponding to the amount of
2025 notes repurchased (such terminations, the “unwind
transactions”). In connection with such terminations of the
existing option transactions, Tandem expects such existing option
counterparties and/or their respective affiliates will unwind
various derivatives with respect to Tandem’s common stock and/or
sell shares of Tandem’s common stock concurrently with or shortly
after pricing of the notes. This activity could decrease (or reduce
the size of any increase in) the market price of Tandem’s common
stock at that time and could decrease (or reduce the size of any
increase in) the market value of the notes.
As discussed above, Tandem also intends to use approximately
$30.0 million of the net proceeds from the offering to repurchase
shares of its common stock. Tandem expects to repurchase such
shares from purchasers of notes in the offering in privately
negotiated transactions with or through one of the initial
purchasers or its affiliate concurrently with the pricing of the
offering (the “share repurchases”) at a purchase price per share of
Tandem’s common stock equal to the closing price per share of
Tandem’s common stock on March 5, 2024, which was $27.105 per
share. These share repurchases could increase, or reduce the size
of any decrease in, the market price of Tandem’s common stock,
including concurrently with the pricing of the notes, and could
have resulted in a higher effective conversion price for the notes.
This press release is not an offer to repurchase Tandem’s common
stock, and the offering of the notes is not contingent upon the
repurchase of Tandem’s common stock.
The notes and any shares of Tandem’s common stock issuable upon
conversion of the notes have not been and will not be registered
under the Securities Act, any state securities laws or the
securities laws of any other jurisdiction, and unless so
registered, may not be offered or sold in the United States absent
registration or an applicable exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act
and other applicable securities laws.
This press release is neither an offer to sell nor a
solicitation of an offer to buy any of 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 the registration or qualification thereof under the
securities laws of any such state or jurisdiction.
About Tandem Diabetes Care, Inc.
Tandem Diabetes Care, a global insulin delivery and diabetes
technology company, manufactures and sells advanced automated
insulin delivery systems that reduce the burden of diabetes
management, while creating new possibilities for patients, their
loved ones, and healthcare providers. Tandem’s pump portfolio
features the Tandem Mobi system and the t:slim X2 insulin pump,
both of which feature Control-IQ advanced hybrid closed-loop
technology. Tandem Diabetes Care is based in San Diego,
California.
Tandem Diabetes Care, the Tandem logo, Control-IQ, Tandem Mobi
and t:slim X2 are either registered trademarks or trademarks of
Tandem Diabetes Care, Inc. in the United States and/or other
countries.
Forward-looking Statements
This press release includes forward-looking statements
regarding, among other things, the offering, including statements
regarding the closing of the offering of the notes, capped call
transactions, repurchase transactions and unwind transactions, the
expected use of proceeds from the offering, the amount of
repurchases of our 2025 notes and shares of our common stock, the
potential impact of the foregoing or related transactions on
dilution to holders of our common stock and the market price of our
common stock or the notes. Any statement describing our
expectations, intentions or beliefs is a forward-looking statement
and should be considered an at-risk statement. Such statements are
subject to certain risks and uncertainties, including, without
limitation, changes in market conditions, whether we will be able
to satisfy closing conditions related to the offering, whether and
on what terms we may repurchase any of the 2025 notes or shares of
our common stock, whether the capped call transactions will become
effective, whether the unwind transactions will become effective
and unanticipated uses of capital, any of which could differ or
change based upon market conditions or for other reasons. Tandem’s
forward-looking statements also involve assumptions that, if they
never materialize or prove correct, could cause its results to
differ materially from those expressed or implied by such
forward-looking statements. Although Tandem’s forward-looking
statements reflect the good faith judgment of its management, these
statements are based only on facts and factors currently known by
Tandem. As a result, you are cautioned not to rely on these
forward-looking statements. These and other risks are described in
additional detail in Tandem’s annual report on Form 10-K for the
year ended December 31, 2023, which is on file with the Securities
and Exchange Commission.
In this press release, unless the context requires otherwise,
“Tandem,” “Tandem Diabetes Care,” “we,” “our,” and “us” refers to
Tandem Diabetes Care, Inc. and its subsidiaries.
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version on businesswire.com: https://www.businesswire.com/news/home/20240305597839/en/
Tandem Investor Contact: 858-366-6900
IR@tandemdiabetes.com
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