AMRI Announces Pricing of $130 Million Cash Convertible Senior Notes

ALBANY, New York, Nov. 20, 2013 /PRNewswire/ -- Albany Molecular Research, Inc. (NASDAQ: AMRI) ("AMRI") announced that it has upsized to $130.0 million principal amount and priced its previously announced private offering of cash convertible senior notes due 2018 to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). AMRI also granted the initial purchasers of the notes an option to purchase up to an additional $20.0 million principal amount of the notes solely to cover over-allotments, if any.

When issued, the notes will be unsecured senior obligations of AMRI and bear interest at a rate of 2.25% per annum, payable semi-annually on May 15 and November 15 of each year, commencing May 15, 2014. The notes will mature on November 15, 2018, unless earlier repurchased or converted into cash in accordance with their terms prior to such date. The notes will be convertible at the option of the holders only in certain circumstances and solely into cash. The notes will not be convertible into AMRI's common stock or any other security under any circumstances. AMRI will not have the right to redeem the notes prior to maturity. The conversion rate for the notes will initially be 63.9844 shares of AMRI's common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $15.63 per share of AMRI's common stock. The initial conversion price of the notes represents a premium of approximately 32.0% to the $11.84 per share last reported sale price of AMRI's common stock on November 19, 2013. The offering of the notes is expected to close on November 25, 2013, subject to customary closing conditions.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are acting as joint-bookrunning managers for the offering.

In connection with the pricing of the notes, the Company entered into privately negotiated cash convertible note hedge transactions with one or more of the initial purchasers of the notes or their respective affiliates (the "option counterparties"). The initial strike price of the cash convertible note hedge transactions is approximately $15.63 per share of common stock (the same as the initial conversion price of the notes). The Company also entered into privately negotiated warrant transactions with the option counterparties, with an initial strike price of approximately $18.94 per share of common stock. If the initial purchasers exercise their over-allotment option, the Company may increase the size of the cash convertible note hedge transactions and enter into additional warrant transactions.

The cash convertible note hedge transactions are expected to offset cash payments due upon conversion of the notes in excess of the principal amount thereof in the event that the market value per share of common stock at the time of conversion of the notes is greater than the strike price under the cash convertible note hedge transactions. If, however, the market price per share of common stock exceeds the strike price under the warrant transactions as well at the time they are exercised, there would be dilution from conversion of the notes to the extent the then-current market price per share of common stock exceeds the strike price under the warrant transactions.

In connection with establishing their initial hedge of the cash convertible note hedge and warrant transactions, the option counterparties have advised the Company that they or their affiliates expect to enter into various derivative transactions with respect to the Company's common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of the Company's common stock or the notes at that time. In addition, the option counterparties have advised the Company that they or their affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the Company's common stock and/or purchasing or selling the Company's common stock or other securities of the Company in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so during any observation period related to a conversion of notes). This activity could also cause or avoid an increase or a decrease in the market price of the Company's common stock or the notes.

AMRI estimates that the net proceeds from the offering of the notes will be approximately $125.8 million (or approximately $145.3 million if the initial purchasers exercise their over-allotment option in full), after deducting the initial purchasers' discounts and commissions and the estimated offering expenses payable by AMRI. AMRI expects to use a portion of the net proceeds from the offering of the notes to pay the cost of the cash convertible note hedge transactions (after such cost is partially offset by the proceeds from the sale of the warrants). The remaining net proceeds from the offering may be used for working capital and other general corporate purposes, including to fund possible acquisitions of, or investments in, complementary businesses, products, services, technologies and capital expenditures.

The notes have not been and will not be registered under the Securities Act or the securities laws of any state or other jurisdiction and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable securities laws of any relevant state or jurisdiction.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. AMRI gives no assurance that the proposed offering can be completed on any terms.