ANI Pharmaceuticals (ANIP)

[Just the facts maam]

Yodle, The Sr Convertible notes were negotiated at a conversion rate of $69.48. However there is a clause that if ANIP undergoes a fundamental change before the notes are due in 2019 the note holder can get their money or convert the notes to shares of ANIP.

Page S-40 of the Sec filing give you the conversion table. They could get up to 18.7091 shares for each $1000 note instead of the 14.3916 shares for the same $1000 note had the fundamental change not occurred.


They call the process a Make-whole Fundamental Change

A “fundamental change” will be deemed to have occurred at the time after the notes are originally issued if any of the following occurs:

(1) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than us, our wholly owned subsidiaries and our and their employee benefit plans, has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of our common equity representing more than 50% of the voting power of our common equity;

(2) the consummation of (A) any recapitalization, reclassification or change of our common stock (other than changes resulting from a subdivision or combination) as a result of which our common stock would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of us pursuant to which our common stock will be converted into cash, securities or other property or assets; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of us and our subsidiaries, taken as a whole, to any person other than one of our wholly owned subsidiaries; provided, however, that a transaction described in clause (B) in which the holders of all classes of our common equity immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of common equity of the continuing or surviving corporation or transferee or the parent thereof immediately after such transaction in substantially the same proportions as such ownership immediately prior to such transaction shall not be a fundamental change pursuant to this clause (2);

(3) “continuing directors” (as defined below) cease to constitute at least a majority of our board of directors;

(4) our stockholders approve any plan or proposal for the liquidation or dissolution of us; or

(5) our common stock (or other common stock underlying the notes) ceases to be listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors).

424b5 filing

Now if a fundamental change occurs and the holders all convert their notes. You are looking at ANIP issuing between 2,068,793 and 2,689,433 additional shares.

Now to protect themselves from hedges driving the price down to dilute the shares ANIP used some of the funds they raised to takeout a hedge which negates the dilutive effect until As a result of the convertible note hedge and warrant transactions, the initial effective conversion price for the Notes, solely from the perspective of the Company, is $96.21 per share.

So as I understand it, if it is triggered which I believe it will be, ANIP will pocket approx. $55.3 million from the hedge, issue the shares and which wipe out the debt.

JMHO