Advertisement
The notes, which are unsecured, will pay interest semi-annually at a rateof 3.75% per annum and will mature on September 15, 2015. The notes areconvertible under certain circumstances into cash at an initial conversionreference rate of 75.0751 shares of Mylan's common stock per $1,000 principalamount of notes (which is equal to an initial conversion reference price ofapproximately $13.32 per share, and which represents an approximate 20%conversion premium based on the last reported sale price of $11.10 per shareof Mylan's common stock on September 9, 2008). The notes are not convertibleinto shares of Mylan common stock or any other securities.
Advertisement
In addition, Mylan expects to enter into separate cash settled convertiblenote hedge and net share settled warrant transactions with one or more of theinitial purchasers of the notes and/or a financial institution intermediarywhich expects to involve one or more of the initial purchasers as hedgingcounterparties. The convertible note hedge transactions are comprised ofpurchased cash-settled call options that will have an exercise price equal tothe conversion price of the notes. The warrant transactions are comprised ofwarrants which Mylan will sell to each counterparty for the purchase of sharesof Mylan common stock. These transactions are generally expected to have theeconomic effect on Mylan of increasing the conversion reference price of thenotes to approximately $20.00 per share, representing an approximate 80%effective conversion premium on the last reported sale price of Mylan's commonstock on September 9, 2008. In connection with these transactions, thecounterparties have advised Mylan that they or their hedging counterpartiesmay enter into various derivative transactions with respect to Mylan's commonstock concurrently with or shortly following pricing of the notes. Theseactivities could have the effect of increasing or preventing a decline in theprice of Mylan's common stock concurrently with or following the pricing ofthe notes. In addition, the counterparties or their hedging counterpartiesmay from time to time, following the pricing of the notes, enter into orunwind various derivative transactions with respect to Mylan's common stockand/or purchase or sell Mylan's common stock or other securities of Mylan(including the notes) in secondary market transactions. These activities couldhave the effect of decreasing the price of Mylan's common stock and its othersecurities.
Mylan estimates that the net proceeds from this offering of the notes willbe approximately $487.5 million, after deducting the initial purchasers'discount and estimated offering expenses payable by Mylan (or approximately$560.6 million if the initial purchasers exercise their overallotment optionin full). Mylan intends to use approximately $85.8 million of the netproceeds from this offering to fund the net cost of convertible note hedge andwarrant transactions described above. After funding the net cost of suchtransactions, Mylan expects to use the remaining net proceeds from theoffering to pay down outstanding borrowings under its senior secured revolvingcredit facility (which currently bears interest at a rate of LIBOR plus 2.50%per annum) and its senior secured term loan credit facilities (which currentlybear interest at rates of LIBOR (or EURIBOR, if applicable) plus between 3.00%to 3.25% per annum).
Mylan expects to close this offering of notes on Septem
