Tandem Diabetes Care, Inc., a leading global insulin delivery and diabetes technology company, has declared the pricing of $275.0 million aggregate principal amount of 1.50% Convertible Senior Notes due 2029 (referred to as the “notes”) in a private placement aimed at qualified institutional buyers.
The offering, originally set at $250.0 million, has been upsized, showcasing strong investor demand.
Additionally, Tandem has granted the initial purchasers an option to acquire up to an additional $41.25 million aggregate principal amount of notes.
About Tandem Diabetes Care, Inc.
Tandem Diabetes Care, Inc. is a leading global insulin delivery and diabetes technology company headquartered in San Diego, California.
The company is dedicated to manufacturing and selling advanced automated insulin delivery systems, including the Tandem Mobi system and the t:slim X2 insulin pump, both incorporating Control-IQ advanced hybrid closed-loop technology.
These innovations aim to alleviate the burden of diabetes management and open new possibilities for patients, caregivers, and healthcare providers.
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Details of Convertible Senior Notes
The notes, which will be general unsecured obligations of Tandem, will carry a semiannual interest payable on March 15 and September 15 of each year, commencing September 15, 2024, at a rate of 1.50% per annum.
The maturity date for these notes is March 15, 2029, unless earlier converted, redeemed, or repurchased.
Utilization of Proceeds
Proceeds from the offering, estimated to be approximately $266.3 million (or roughly $306.4 million if the initial purchasers exercise their option in full), will be utilized for various purposes.
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Conversion and Redemption Terms
These include covering the cost of capped call transactions, repurchasing a portion of its 1.50% Convertible Senior Notes due 2025 (2025 notes), and repurchasing common stock through privately negotiated transactions.
In the event of the initial purchasers exercising their option, the remainder of the proceeds will be allocated for general corporate purposes.
Notably, holders have the right to convert their notes under specific conditions before December 15, 2028, with a conversion rate initially set at 28.9361 shares of Tandem’s common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $34.56 per share.
Tandem is restricted from redeeming the notes before March 22, 2027, but may opt to redeem them afterward under certain conditions.
Capped Call Transactions
To mitigate dilution to its common stock resulting from any conversion of the notes, Tandem has entered into capped call transactions.
Additionally, Tandem anticipates hedging activities by option counterparties, which may impact the market price of its common stock and the notes.
Repurchasing of Notes
Concurrently with the notes offering, Tandem has entered into privately negotiated transactions to repurchase approximately $246.7 million aggregate principal amount of its 2025 notes, further reinforcing its financial strategy.
Impact on Tandem’s Stock
Investors should note that the notes and any shares of Tandem’s common stock issued upon conversion have not been registered under the Securities Act or any state securities laws.
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