Elan will now raise a total of $573 million from a convertible bond and rights issue, the proceeds of which will be used to repurchase Elan's Liquid Yield Option Notes, or LYONs. The rest of the cash will be used for general corporate purposes, the company said.
However, even with the extra demand in the market for the issue, the company's shares fell further, they lost 5% on Thursday when the share and bond issue was announced. The shares lost a further 5% on the ISEQ yesterday.
On Thursday Elan said it would issue 35 million new shares, priced at $4.95 per share, raising $173.3 million, and has increased the convertible bond issue from $250 million to $400 million.
“The increase in the convertible note offering would suggest a healthy demand for the issue in the UK, and Europe.
"We believe that the additional cash raised guarantees greater financial liquidity through 2005, and, as noted yesterday, leaves the company in a position to focus on resolution of the SEC inquiry, and future development of its strong pipeline of drugs,” said Goodbody Stockbrokers pharmaceutical analyst, Ian Hunter.
Rating company Standard & Poor's yesterday assigned a CCC senior unsecured debt rating to Elan's bond issue.
S&P also said that upon completion of the deal, it will raise the corporate credit and senior unsecured debt ratings on Elan to B-, from CCC+. The rating's firm said it will also raise ratings on Elan's existing subordinated debt to CCC from CCC-.
Brokers said Elan’s share price is likely to remain volatile in the short-term.