UCB raises 450 mln euros from convertible bonds
Belgian pharmaceutical group UCB raised 450 million euros ($659.9 million) from a six-year convertible bond offer on Wednesday to refinance debt, a figure that could rise to 500 million euros.
The initial conversion price will be 38.746 euros per share, a premium of 35 percent to the volume-weighted average price of UCB's shares from launch to pricing, UCB said.
UCB shares closed down 3.3 percent at 28.84 euros, against a 0.5 percent drop of the DJ Stoxx European health care index .SXDP. The stock was the second weakest in the FTSEurofirst 300 .FTEU3 index of top European shares.
Issuing a convertible bond will automatically lead to a certain amount of dilution. This is probably weighing on the stock, said an analyst, who declined to be named.
If all the bonds were converted into shares at the initial conversion price, 11.6 million new shares would be issued, representing a 6.0 percent dilution of UCB's share capital, excluding the over-allotment option, UCB said.
The analyst said general market sentiment was also a factor in the stock's decline, with investors fearing a correction after UCB's rise from 22 euros at the end of July.
UCB took out a large syndicated loan to fund the acquisition of German peer Schwarz Pharma in 2007 and still has a net debt of 2.2 billion euros. Some 300 million euros of that debt matures next year, the rest in 2011.
The primary motivation is the refinancing of debt, rather than funding further acquisitions, a UCB spokesman said.
The bond, placed with institutional investors, will have an annual coupon of 4.5 percent, payable semi-annually and be issued and redeemed at 100 percent, UCB said in a statement.
UCB had initially sought 350 million euros, but increased that to 450 million euros early on Wednesday afternoon, citing strong demand.
That could be rise to 500 million euros if the joint bookrunners -- Barclays Capital, BNP Paribas Fortis and KBC Financial Products -- choose to exercise their over-allotment options by Oct. 22, the group said.
Financiere de Tubize S.A., which holds 36.20 percent of UCB's ordinary shares, has said it would support the issue, it added.
UCB said it would need to convene an extraordinary meeting of shareholders to authorise the conversion of bonds into shares.
($1=.6863 Euro)
(Additional reporting by Philip Blenkinsop; Editing by Leslie Adler)
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