Novavax, Inc. (NASDAQ:NVAX) intends to raise more debt through the sale of convertible notes than it previously projected. The vaccine developer will now raise debt worth $300 million as opposed to the $200 million that management had earlier anticipated. The proceeds from the debt fundraiser will finance various clinical projects and add to working capital. JPMorgan & Chase Co. (NYSE:JPM) and Citigroup Inc (NYSE:C) are among the financial institutions helping Novavax with the fundraiser.
The $300 million that Novavax is raising is in the form of senior unsecured notes, which will convert into the company’s common stock when they mature. The notes are expected to mature on Feb. 1, 2023, but they will earn interest at the rate of 3.75%. Novavax said cash interest on the notes will be distributed to holders twice a year in February and August. The initial interest payment will be made on August 1, 2016.
Room to purchase more notes
Because of investor appetite for debt, Novavax has taken measures to make a reasonable amount of the notes available. As such, while the company is primarily selling $300 million worth of convertible notes, it has made a provision for the underwriters to purchase additional notes of up to $30 million to cover oversubscription.
Novavax is expecting $291 million in net proceeds from the debt offering, assuming that no additional notes are purchased. If the underwriters ask for more notes to cope with oversubscription, the company expects net proceeds of $320 million, before deducting expenses related to the offering but after accounting for commissions and discounts.
Putting the money to use
Novavax has identified a number of areas where it intends to spend the funds. The company plans to funnel some of the funds to finance various clinical programs, including the Phase 3 testing of RSV F Vaccine in seniors and expectant women. Some money will be channeled through capex and acquisitions among others.
Novavax has tapped Citigroup and JPM as managers and Guggenheim Securities and Piper Jaffray as co-lead managers in the notes offering.