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Investing.com -- Shares of BridgeBio Pharma, Inc. (NASDAQ:BBIO) dipped 3% in after-hours trading on Monday following the company’s announcement of a proposed offering of convertible senior notes to refinance existing senior secured debt.
The pharmaceutical company stated its intention to offer $500 million in convertible senior notes due 2031 to qualified institutional buyers, with an option for initial purchasers to buy an additional $75 million in notes. BridgeBio plans to use the proceeds to repay all outstanding borrowings under its Financing Agreement and terminate the agreement, which required approximately $51.5 million in interest payments in 2024. The termination is expected to reduce pro forma interest expenses and enhance operational flexibility for the company.
Additionally, BridgeBio may use up to $50 million of the remaining proceeds to repurchase shares of its common stock in privately negotiated transactions. This could potentially affect the market price of the company’s stock and the effective conversion price of the notes. The exact terms of the notes, such as the conversion and interest rates, will be determined at the time of pricing.
The notes will be senior unsecured obligations of BridgeBio, ranking equally with other unsecured debt and junior to any secured debt. They will be convertible into cash, shares of BridgeBio’s common stock, or a combination thereof, with the form of consideration at the company’s election. The company may not redeem the notes before March 6, 2028, but may do so afterwards under certain conditions.
This strategic financial maneuver aims to streamline BridgeBio’s long-term debt management, but the announcement has led to a slight decline in the company’s stock price in after-hours trading. The notes and the shares of common stock issuable upon conversion have not been registered under the Securities Act and will be offered in transactions exempt from or not subject to registration requirements.
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