Tandem Diabetes Care, Inc. (NASDAQ: TNDM), a global leader in insulin delivery and diabetes technology, has announced the pricing of $275.0 million aggregate principal amount of 1.50% Convertible Senior Notes due 2029 (the “notes”) in a private placement. This offering, initially set at $250.0 million, was upsized to accommodate increased demand. The notes are offered to qualified institutional buyers under Rule 144A of the Securities Act of 1933.
Additionally, Tandem has granted the initial purchasers of the notes an option to purchase up to an additional $41.25 million aggregate principal amount of notes within a 13-day period from the issuance date. 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, accruing interest semiannually at a rate of 1.50% per year, with payments due on March 15 and September 15 of each year, starting from September 15, 2024. They will mature on March 15, 2029, unless earlier converted, redeemed, or repurchased.
Tandem estimates that net proceeds from the offering will be approximately $266.3 million (or $306.4 million if the initial purchasers exercise their option in full), after accounting for discounts, commissions, and offering expenses. The company plans to use these proceeds, along with cash on hand, for various purposes, including repurchasing existing convertible senior notes and common stock, and entering into capped call transactions.
Holders will have the right to convert their notes under specified conditions before December 15, 2028, and at any time thereafter until the maturity date. The initial conversion rate for the notes will be 28.9361 shares of Tandem’s common stock per $1,000 principal amount of notes, with adjustments for certain events.
Tandem cannot redeem the notes before March 22, 2027, but afterward may do so, subject to certain conditions. In the event of a “fundamental change,” holders may require Tandem to repurchase their notes at a predetermined price.
To hedge against dilution resulting from potential conversions of the notes, Tandem entered into capped call transactions with initial purchasers. These transactions aim to offset dilution and are subject to a cap.
Tandem expects holders of its existing 2025 notes to participate in repurchase transactions, which may involve unwinding hedge positions and purchasing Tandem’s common stock.
The offering does not constitute an offer to sell nor a solicitation of an offer to buy, and the notes and any shares issuable upon conversion have not been registered under relevant securities laws.
