Tandem Diabetes stock price drops due to $200 million convertible bond issuance

Investing.com – Tandem Diabetes Care Inc (NASDAQ:TNDM) stock fell 5% after hours on Monday, after the company announced plans to issue $200 million of convertible preferred notes due 2032 to qualified institutional buyers through a private placement.

The insulin delivery and diabetes technology company also plans to grant initial purchasers an option to buy up to an additional $30 million principal amount of notes within 13 days of issuance.

These notes will be unsecured debt of Tandem, bearing interest payable semiannually. Upon conversion, the company will have the option to pay or deliver cash, its common stock, or a combination of both, at its discretion.

Tandem expects to use the net proceeds to pay for capped call transactions, as well as for general corporate purposes, which may include acquisitions or strategic investments in complementary businesses or technologies, working capital, operating expenses, and capital expenditures.

At pricing, Tandem expects to enter into privately negotiated capped call transactions with initial purchasers or their affiliates and other financial institutions. These capped call transactions are expected to offset potential dilution of Tandem’s common stock from note conversions, but are subject to limits.

The company notes that counterparties to the options transactions or their affiliates may purchase Tandem’s common stock around the time of the notes pricing or shortly thereafter, which could impact the stock’s market price.

These notes and any shares issued upon conversion have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption.

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