Cubist announces pricing of 2.50% Convertible Senior Notes due 2017

Oct 20 2010

Cubist Pharmaceuticals, Inc. (NASDAQ: CBST) today announced the successful pricing of $400 million aggregate principal amount of its 2.50% Convertible Senior Notes due 2017. Cubist has granted the underwriters an option to purchase up to an additional $50 million aggregate principal amount of the notes.

The notes will mature on November 1, 2017, and will bear interest at a rate of 2.50% per year, payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2011. The notes will be convertible, under certain circumstances, into cash, shares of Cubist's common stock, or a combination, at Cubist's election, at an initial conversion rate of 34.2759 shares of Cubist's common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $29.18 per share of Cubist's common stock.

Cubist intends to use a portion of the net proceeds of the offering to repurchase approximately $191 million aggregate principal amount of its 2.25% Convertible Subordinated Notes due June 15, 2013 through privately negotiated transactions. Cubist intends to use the remaining proceeds to increase investment in building its pipeline via internal and external sources and for working capital and other general corporate purposes. In addition, a portion of the remaining net proceeds of this offering may be used to acquire or invest in businesses, products, services or technologies complementary to our current business, through mergers, acquisitions, in-licensing, joint ventures and similar strategic transactions. Cubist intends to invest the net proceeds of this offering in interest-bearing investment grade securities pending the previously described uses.

Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated are acting as joint book-running managers and Citigroup Global Markets Inc. and RBC Capital Markets Corporation are acting as co-managers. An electronic copy of the prospectus, which is filed as part of Cubist's automatically effective registration statement on Form S-3, may be obtained from any of the joint book-running managers by contacting: Morgan Stanley & Co. Incorporated, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, New York 10014, telephone: (866) 718-1649, or by emailing [email protected]; or Goldman, Sachs & Co., Attention: Prospectus Department, 200 West Street, New York, New York 10282, telephone: (212) 902-1171 or toll-free (866) 471-2526 or by emailing [email protected]. An electronic copy of the prospectus may also be obtained at no charge at the Securities and Exchange Commission's website at www.sec.gov.

This news release does not constitute an offer to sell or a solicitation of an offer to buy the notes described herein, nor shall there be any sale of these notes, in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the laws of such jurisdiction. The offering of the notes will be made only by means of a prospectus.

Source: Cubist Pharmaceuticals, Inc.