Entry Into a Material Definitive Agreement
On August 13, 2019, Clovis Oncology, Inc. (the “Company”) consummated the offering of $250 million aggregate principal amount of its 4.50% Convertible Senior Notes due 2024 (the “Notes”). The Company has granted the initial purchasers in the offering an option to purchase, for settlement within a period of 13 days from, and including, the date the Notes are first issued, up to an additional $37.5 million aggregate principal amount of Notes.
The Notes were sold in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, (the “Securities Act”). The offer and sale of the Notes and the shares of common stock issuable upon conversion of the Notes have not been registered under the Securities Act or any state securities laws, and, unless so registered, the Notes and such shares may not be offered or sold in the United States except pursuant to an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.
The Notes were issued pursuant to that certain Indenture, dated as of August 13, 2019 (the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee.
Priced to investors in the offering at 100% of their principal amount, the Notes are senior unsecured obligations of the Company, ranking senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to all of the Company’s liabilities that are not so subordinated, including the Company’s currently outstanding 2.50% Convertible Senior Notes due 2021 (the “2021 Notes”) and its 1.25% Convertible Senior Notes due 2025; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, including the Company’s borrowing under its Financing Agreement with certain affiliates of TPG Sixth Street Partners, LLC as lenders and as the administrative agent, dated as of May 1, 2019; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.
The Notes will mature on August 1, 2024, unless earlier repurchased or converted. Interest on the Notes will be payable on February 1 and August 1 of each year, beginning on February 1, 2020.
The Notes are convertible at an initial conversion rate of 137.2213 shares of the Company’s common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $7.29 per share of common stock). The conversion rate is subject to adjustment in some events as described in the Indenture. Holders may convert their Notes at any time prior to the close of business on the business day immediately preceding August 1, 2024. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its Notes in connection with such corporate event in certain circumstances by a specified number of shares of common stock as described in the Indenture.
The Company will not have the right to redeem the Notes at its option prior to their maturity. If the Company undergoes a fundamental change as described in the Indenture prior to the maturity date of the Notes, holders of the Notes may require the Company to repurchase for cash all or part of their Notes at a 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.
The Indenture provides for customary terms and covenants, including that upon certain events of default, either the trustee or the holders of not less than 25% in aggregate principal amount of the Notes then outstanding may declare the unpaid principal amount of the Notes and accrued and unpaid interest, if any, thereon immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization, the principal amount of the Notes together with accrued and unpaid interest, if any, thereon will automatically become and be immediately due and payable.
The net proceeds from the sale of the Notes were approximately $242.3 million, of which approximately $171.8 million were used to repurchase a portion of the Company’s outstanding 2021 Notes, which will mature on September 15, 2021. Such repurchases were made through individually negotiated, private transactions. The Company intends to use the remaining net proceeds from the offering for general corporate purposes, including sales and marketing expenses associated with Rubraca, funding of the Company’s development programs, payment of