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CBST > SEC Filings for CBST > Form 8-K on 5-Sep-2013All Recent SEC Filings

Show all filings for CUBIST PHARMACEUTICALS INC | Request a Trial to NEW EDGAR Online Pro

Form 8-K for CUBIST PHARMACEUTICALS INC


5-Sep-2013

Entry into a Material Definitive Agreement, Creation of a Direct Finan


Item 1.01 Entry into a Material Definitive Agreement

Purchase Agreement

On September 4, 2013, Cubist Pharmaceuticals, Inc. (the "Company") entered into a Purchase Agreement (the "Purchase Agreement") with Morgan Stanley & Co. LLC, Barclays Capital Inc. and RBC Capital Markets, LLC (the "Representatives"), as the representatives of the initial purchasers (the "Initial Purchasers") relating to the sale of $300 million aggregate principal amount of 1.125% Convertible Senior Notes due 2018 (the "2018 Notes") and $400 million aggregate principal amount of 1.875% Convertible Senior Notes due 2020 (the "2020 Notes", together with the 2018 Notes, the "Notes") to the Initial Purchasers. The Company also granted the Initial Purchasers options to purchase up to an additional $50 million aggregate principal amount of each series of the Notes.

The Purchase Agreement includes customary representations, warranties and covenants. Under the terms of the Purchase Agreement, the Company has agreed to indemnify the Initial Purchasers against certain liabilities.

Morgan Stanley & Co. LLC and RBC Capital Markets, LLC, and/or certain of their respective affiliates, are lenders and/or agents under our existing credit facility. Morgan Stanley & Co. LLC is acting as our financial advisor in connection with our proposed acquisition of Optimer Pharmaceuticals, Inc. ("Optimer") and Barclays Capital Inc. is acting as our financial advisor in connection with our proposed acquisition of Trius Therapeutics, Inc. They will receive customary fees and commissions for these services and they and the other Initial Purchasers and their respective affiliates have received, and may in the future receive, customary fees and commissions for the types of services described above.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Convertible Bond Hedge and Warrant Transactions

In connection with the offering of the Notes, on September 4, 2013, the Company entered into convertible bond hedge transactions with three counterparties, Morgan Stanley & Co. International plc, Barclays Bank PLC and Royal Bank of Canada (the "Option Counterparties"). The convertible bond hedge transactions are generally expected, but not guaranteed, to reduce the potential dilution and/or offset the cash payments the Company is required to make in excess of the principal amount of converted Notes, in each case, upon conversion of the Notes in the event that the market price per share of the Company's common stock, as measured under the terms of the convertible bond hedge transactions, is greater than the conversion price of the Notes. The Company also entered into warrant transactions in which it sold warrants to the Option Counterparties exercisable into a maximum of 11,252,150 shares of its common stock, which are subject to customary anti-dilution adjustments. The strike price of the warrants will initially be $96.43 per share, which is 55% above the last reported sale price of the Company's common stock on September 4, 2013. The warrants are exercisable over the 80 trading day period beginning on November 30, 2018 or November 30, 2020, as applicable. The warrant transactions will have a dilutive effect to the extent that the market price per share of the Company's common stock exceeds the applicable strike price of the warrants during the measurement period at the maturity of the warrants. The Company paid the Option Counterparties approximately $157 million for the convertible bond hedge transactions and received approximately $107 million from the Option Counterparties for the warrants, resulting in a net cost to the Company of approximately $51 million. The Company may enter into one or more additional convertible bond hedge transactions and warrant transactions if the Initial Purchasers exercise their options to purchase up to an additional $50 million aggregate principal amount of either series of the Notes.

Aside from the initial payment of a premium to the Option Counterparties, the Company will not be required to make any cash payments to the Option Counterparties under the convertible bond hedge transactions and will be entitled to receive from the Option Counterparties a number of shares of the Company's common stock, an amount of cash or a combination of cash and shares of the Company's common stock generally based on the amount by


which the market price per share of the Company's common stock, as measured under the terms of the convertible bond hedge transactions, is greater than the conversion price of the Notes during the relevant valuation period under the convertible bond hedge transactions. However, if the market price per share of the Company's common stock, as measured under the terms of the warrant transactions, exceeds the strike price of the warrants during the measurement period at the maturity of the warrants, the Company will owe the Option Counterparties shares of its common stock. The Company will not receive any additional proceeds if warrants are exercised.

The foregoing description of the convertible bond hedge transactions and warrant transactions is qualified in its entirety by reference to the base convertible bond hedge transaction confirmations relating to the convertible bond hedge . . .



Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth under Item 1.01 "Amendment to Credit Agreement" of this Current Report on Form 8-K is incorporated herein by reference.



Item 3.02 Unregistered Sales of Equity Securities

As described in Item 1.01 of this Current Report on Form 8-K, which is incorporated herein by reference, on September 4, 2013, the Company entered into warrant transactions with each of the Option Counterparties. Pursuant to the warrant transactions, the Company issued 8,492,260 warrants with a strike price of $96.43 per share. The number of warrants and the strike price are subject to adjustment under certain circumstances described in the warrant transaction confirmations. The Company offered and sold the warrants in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. Neither the warrants nor the underlying shares of common stock (issuable in the event the market price per share of the common stock exceeds the strike price of the warrants on the date the warrants are exercised) have been registered under the Securities Act. Neither the warrants


nor such underlying shares of common stock may be offered or sold in the United States absent registration or an applicable exemption from registration requirements.



Item 8.01 Other Events

On September 5, 2013, the Company issued a press release announcing the pricing of the Notes.

A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.



Item 9.01 Financial Statements and Exhibits

(d) Exhibits

1.1     Purchase Agreement, dated as of September 4, 2013, between Cubist
        Pharmaceuticals, Inc., Morgan Stanley & Co. LLC, Barclays Capital Inc.
        and RBC Capital Markets, LLC, as Representatives of the Initial
        Purchasers

10.1    Base convertible bond hedge transaction confirmation, dated as of
        September 4, 2013, by and between Morgan Stanley & Co. International plc
        and Cubist Pharmaceuticals, Inc., in reference to the 1.125% Convertible
        Senior Notes due 2018

10.2.   Base convertible bond hedge transaction confirmation, dated as of
        September 4, 2013, by and between Barclays Bank PLC and Cubist
        Pharmaceuticals, Inc., in reference to the 1.125% Convertible Senior
        Notes due 2018

10.3    Base convertible bond hedge transaction confirmation, dated as of
        September 4, 2013, by and between Royal Bank of Canada and Cubist
        Pharmaceuticals, Inc., in reference to the 1.125% Convertible Senior
        Notes due 2018

10.4    Base issuer warrant transaction confirmation, dated as of September 4,
        2013, by and between Morgan Stanley & Co. International plc and Cubist
        Pharmaceuticals, Inc., in reference to the 1.125% Convertible Senior
        Notes due 2018

10.5    Base issuer warrant transaction confirmation, dated as of September 4,
        2013, by and between Barclays Bank PLC and Cubist Pharmaceuticals, Inc.,
        in reference to the 1.125% Convertible Senior Notes due 2018

10.6    Base issuer warrant transaction confirmation, dated as of September 4,
        2013, by and between Royal Bank of Canada and Cubist
        Pharmaceuticals, Inc., in reference to the 1.125% Convertible Senior
        Notes due 2018

10.7    Base convertible bond hedge transaction confirmation, dated as of
        September 4, 2013, by and between Morgan Stanley & Co. International plc
        and Cubist Pharmaceuticals, Inc., in reference to the 1.875% Convertible
        Senior Notes due 2020

10.8    Base convertible bond hedge transaction confirmation, dated as of
        September 4, 2013, by and between Barclays Bank PLC and Cubist
        Pharmaceuticals, Inc., in reference to the 1.875% Convertible Senior
        Notes due 2020

10.9    Base convertible bond hedge transaction confirmation, dated as of
        September 4, 2013, by and between Royal Bank of Canada and Cubist
        Pharmaceuticals, Inc., in reference to the 1.875% Convertible Senior
        Notes due 2020

10.10   Base issuer warrant transaction confirmation, dated as of September 4,
        2013, by and between Morgan Stanley & Co. International plc and Cubist
        Pharmaceuticals, Inc., in reference to the 1.875% Convertible Senior
        Notes due 2020

10.11   Base issuer warrant transaction confirmation, dated as of September 4,
        2013, by and between Barclays Bank


        PLC and Cubist Pharmaceuticals, Inc., in reference to the 1.875%
        Convertible Senior Notes due 2020

10.12   Base issuer warrant transaction confirmation, dated as of September 4,
        2013, by and between Royal Bank of Canada and Cubist
        Pharmaceuticals, Inc., in reference to the 1.875% Convertible Senior
        Notes due 2020

99.1    Press Release dated September 5, 2013.


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