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Omnicell Floating $500 Million Convertible Notes Issue

By Eric Volkman – Updated Sep 23, 2020 at 11:25AM

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The company hasn't yet set the price, interest rate, or other key terms for the securities.

Omnicell (OMCL -0.62%) is hoping to reap at least $500 million from an upcoming round of capital raising. The company, which specializes in automation solutions for the pharmaceutical industry, is floating an issue of unsecured, convertible senior notes at that aggregate principal amount. They will be sold in a private placement to qualified institutional buyers. The timing of the issue has not been set.

The notes mature in 2025, and will pay interest semi-annually; the rate will be determined when the issue is priced. They will be convertible either to shares of Omnicell common stock, cash, or a combination of the two. As with the interest, the conversion rates have not yet been set.

Stethoscope atop 100 dollar bills and pennies.

Image source: Getty Images.

The company added that it plans to offer the initial purchasers of the notes an option to buy up to $75 million more of the notes in aggregate principal amount. This option will be available during a 13-day period starting on (and including) the issue date of the securities.

The monies raised will be used to retire debt deriving from the company's revolving credit facility, pay costs related to the issue itself, fund share repurchases, and for "general working purposes."

At the end of its most recently reported quarter, Omnicell had around $47 million in long-term debt and $134 million in cash. The company is profitable more often than not, and for the most part, has managed to grow its top line at encouraging rates over the past few years.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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