UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of Earliest Event Reported): October 29,
2010
PDL
BioPharma, Inc.
(Exact
name of Company as specified in its charter)
000-19756
(Commission
File Number)
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Delaware
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94-3023969
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(State
or Other Jurisdiction of
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(I.R.S.
Employer Identification No.)
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Incorporation)
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932
Southwood Boulevard
Incline
Village, Nevada 89451
(Address
of principal executive offices, with zip code)
(775)
832-8500
(Company’s
telephone number, including area code)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the Company under any of the following
provisions:
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
7.01 Regulation FD Disclosure.
On
October 29, 2010, the Company distributed to analysts covering or interested in
covering the Company’s securities and posted to its website a summary of certain
information regarding the Company’s efforts to improve its capital structure
(the “Information Sheet”). A copy of the Information Sheet is
attached hereto as Exhibit 99.1.
Limitation
of Incorporation by Reference
In
accordance with General Instruction B.2. of Form 8-K, the information in this
report, including Exhibit 99.1, is furnished pursuant to Item 7.01 and shall not
be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange
Act of 1934, as amended, or otherwise subject to the liabilities of that
section. This Current Report will not be deemed an admission as to the
materiality of any information in the report that is required to be disclosed
solely by Regulation FD.
Cautionary
Statements
This
filing and the Information Sheet include “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Although we believe that
the expectations reflected in the forward-looking statements are reasonable, we
can give no assurance that such expectations will prove to be correct. Important
factors that could impair the Company’s royalty assets or business are disclosed
in the “Risk Factors” contained in the Company’s 2009 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 1, 2010. All
forward-looking statements are expressly qualified in their entirety by such
factors. We do not undertake any duty to update any forward-looking statement
except as required by law.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
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Exhibit
No.
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Description
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99.1
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Information
Sheet, dated October 29, 2010
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
| PDL BIOPHARMA, INC. | |||
| (Company) | |||
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By:
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/s/ Christine R. Larson | |
| Christine R. Larson | |||
| Vice President and Chief Financial Officer | |||
Dated: October
29, 2010
EXHIBIT
INDEX
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Exhibit
No.
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Description
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99.1
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Information
Sheet, dated October 29, 2010
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Summary
of PDL’s Efforts to Improve its Capital Structure
In
January 2009, we had two convertible notes outstanding, each $250 million (2012
Notes and 2023 Notes). The 2% senior convertible notes (2012 Notes),
are due in 2012, and the 2.75% subordinated convertible notes (2023 Notes), were
due in 2023, with an August 2010 put right for the note
holders. Because the 2023 Notes conversion rates changed
each time we paid a dividend and, thus, were increasingly dilutive, PDL
repurchased $50 million of the 2023 Notes. The Company also
repurchased $22 million of the 2012 Notes at an average discount to par of 4.8%
in 2009. At the end of 2009, $428 million of convertible debt
remained.
During
2009, we issued the $300 million securitization debt with a March 2015 legal
maturity date but an anticipated September 2012 maturity date. The
debt is repaid from a portion of the royalties received from Genentech, and the
Company has already paid down $75 million of this debt in 2010.
The debt
outstanding at the end of 2009, potentially due and payable by the end of 2012,
totaled $728 million. This debt limited our flexibility to buy new royalty
assets in addition to paying dividends annually, so we continued our efforts to
improve the capital structure in 2010.
In 2010,
we’ve focused our efforts to change our capital structure in two
ways. The first is the reduction of the dilution
associated with the convertible notes, particularly the 2023 Notes. The second
is managing the company’s free
cash, with the objective of reducing debt while maintaining flexibility
to purchase new royalty assets, repurchase shares or convertible notes. To that
end, PDL:
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·
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Repurchased $84 million
of the 2023 Notes in Q2-2010 and, in Q3-2010, in advance of the August
2010 put date for the 2023 Notes, we initiated an induced conversion and a
subsequent call of the remaining $116 million outstanding principal on the
2023 Notes. We fully retired $116
million 2023 Notes in Q3-2020 through the conversion of $112
million to 20 million shares and the repayment of $4 million in
cash.
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·
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Arranged to exchange $92
million of the $228 million outstanding 2012 Notes for new notes
due in February 2015. This transaction is expected to close on November 1,
2010 and extends the repayment of these notes with a low coupon rate and
allows us additional flexibility to implement our strategy. As part of
this transaction, PDL will issue $88 million in new 2015 Notes. With the
proceeds, we maintain the
flexibility to use our available cash to buy royalty assets, buy back
convertible debt or buy back
stock.
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We will
continue to focus on our strategy, driven solely by increasing return for our
shareholders, in the form of extending the life of the company by purchasing new
royalty streams, buying back convertible debt or buying back stock.
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Debt
Outstanding
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12/31/2009
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10/31/2010
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2.75%
Convertible Debt
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Put
August 2010
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$ | 200 | $ | - | ||||
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2.00%
Convertible Debt
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Due
February 2012
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228 | 136 | ||||||
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10.25%
Securitization Note
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Anticipated Maturity
September 2012
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300 | 225 | ||||||
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2.875%
Convertible Debt
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Due
February 2015
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- | 180 | ||||||
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Total
Debt
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$ | 728 | $ | 541 | ||||
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*
Table assumes close of 2012 Note exchange and 2015 Note
issuance.
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