Tempus AI, Inc. has announced its intention to offer $400 million aggregate principal amount of convertible senior notes due in 2030 in a private placement, with an option for the initial purchasers to buy an additional $60 million aggregate principal amount of notes. The notes will be general unsecured obligations of Tempus, will accrue interest payable semiannually in arrears, and will mature on July 15, 2030, unless earlier converted, redeemed, or repurchased.
Tempus expects to use the net proceeds from the offering to repay $274.7 million principal amount of its outstanding senior secured term loans, plus any unpaid premium and interest, to pay the cost of capped call transactions, and for general corporate purposes, including acquisitions or strategic investments in complementary businesses or technologies, working capital, operating expenses, capital expenditures, or repayment of additional indebtedness.
In connection with the pricing of the notes, including the potential over-allotment notes, Tempus expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers or affiliates thereof and/or other financial institutions. The capped call transactions are expected to reduce the potential dilution to the class A common stock upon any conversion of notes and/or offset any cash payments Tempus is required to make in excess of the principal amount of converted notes, with such reduction and/or offset subject to a cap.
The press release also states that the notes and any shares of class A common stock issuable upon conversion of the notes have not been and will not be registered under the securities act, any state securities laws, or the securities laws of any other jurisdiction.
In terms of financial details, the press release does not provide specific numbers on the interest rate, initial conversion rate, or the terms of the notes. However, it does state that a portion of the proceeds from the offering is expected to be used to repay the $275 million 2027 term loan, reducing interest expense and enhancing financial flexibility. Additionally, a portion of the proceeds is expected to be used to pay for capped call transactions to reduce potential dilution.
Tempus is a technology company advancing precision medicine through the practical application of artificial intelligence in healthcare. With one of the world’s largest libraries of multimodal data, Tempus provides AI-enabled precision medicine solutions to physicians to deliver personalized patient care and facilitates the discovery, development, and delivery of optimal therapeutics. Today the company's shares have moved 3.02% to a price of $60.97. If you want to know more, read the company's complete 8-K report here.
