Wright Medical Group, Inc. Announces Proposed Private Placement of Cash Convertible Senior Notes
February 09 2015 - 7:00AM
Wright Medical Group, Inc. (Nasdaq:WMGI) (the "Company") today
announced its intention to commence an offering, subject to market
and other conditions, of $400 million aggregate principal amount of
cash convertible senior notes due 2020 (the "notes"), to be offered
and sold to initial purchasers who would resell the notes to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended. The Company intends to grant
the initial purchasers a 30-day option to purchase up to an
additional $60 million aggregate principal amount of notes solely
to cover over-allotments.
The notes would be senior unsecured obligations and pay interest
semiannually in arrears on February 15 and August 15 of each year,
beginning on August 15, 2015. The notes would be convertible into
cash under certain conditions and during certain periods based on
the value of the Company's common stock. The interest rate,
conversion rate, conversion price and other terms of the notes are
to be determined by negotiations among the Company and the initial
purchasers of the notes. The notes will be subject to modification
upon the consummation of the Company's pending merger with Tornier
N.V. ("Tornier," which will be known as Wright Medical Group N.V.
("Wright N.V.") at and after the effective time of the Tornier
merger), including that following the consummation of the merger,
Wright N.V. will fully and unconditionally guarantee the notes on a
senior unsecured basis, and calculations and other determinations
with respect to the notes relating to the Company's common stock
will instead be calculated or determined by reference to Wright
N.V.'s ordinary shares.
In connection with the pricing of the notes, the Company intends
to enter into one or more privately negotiated cash convertible
note hedge transactions with certain financial institutions (the
"option counterparties"). The cash convertible note hedge
transactions are intended to reduce the net amount of cash payments
that the Company may be required to make upon conversion of the
notes to the extent that such cash payments exceed the principal
amount of converted notes. The Company also intends to enter into
separate privately negotiated warrant transactions with the option
counterparties and anticipates that the warrants will have a strike
price of approximately $40 per share. The issuance of the warrants
could have a dilutive effect on the Company's common stock to the
extent that the market price per share of the Company's common
stock exceeds the applicable strike price of the warrants. If the
initial purchasers exercise their option to purchase additional
notes, the Company intends to enter into additional cash
convertible note hedge and warrant transactions.
The cash convertible note hedge and warrant transactions will be
subject to certain modifications upon consummation of the Tornier
merger transaction, but is not expected to be a "fundamental
change" or "make-whole fundamental change" under the indenture
governing the notes. In addition, following the consummation of the
Tornier merger transaction, Wright N.V. will assume the Company's
obligations under the warrant transactions, and calculations and
other determinations with respect to the cash convertible note
hedge and warrant transactions relating to the Company's common
stock will instead be calculated or determined by reference to
Wright N.V.'s ordinary shares.
The Company estimates that the net proceeds of the offering will
be approximately $389 million (or $447 million if the initial
purchasers' option to purchase additional notes is exercised in
full), after deducting the initial purchasers' discounts and
commissions and estimated offering expenses. The Company expects to
use a portion of the net proceeds from the offering to pay the cost
of the cash convertible note hedge transactions (after such cost is
partially offset by the proceeds to the Company from the sale of
the warrants). The Company intends to use the remaining net
proceeds from the offering for general corporate purposes,
including possible acquisitions and to repay up to approximately
$250 million aggregate principal amount of the Company's
outstanding indebtedness in privately negotiated transactions.
The Company has been advised that, in connection with
establishing their initial hedge positions with respect to the cash
convertible note hedge and warrant transactions, the option
counterparties (or their respective affiliates) expect to enter
into various derivative or other hedging transactions with respect
to the Company's common stock concurrently with or shortly after
the pricing of the notes. These hedging activities could increase
(or reduce the size of any decrease in) the market price of the
Company's common stock or the notes.
In addition, the option counterparties or their respective
affiliates may modify their hedge positions following the pricing
of the notes from time to time (including in connection with the
Tornier merger transaction) by entering into or unwinding various
derivatives with respect to the Company's common stock and/or
purchasing or selling common stock or other securities of the
Company in secondary market transactions (and/or, in each case,
upon consummation of the Tornier merger transaction, the ordinary
shares or other securities of Wright N.V.) (and are likely to do so
during any observation period related to a conversion of notes).
This activity could also impact the market price of the Company's
common stock, the Wright N.V. ordinary shares, other securities of
Wright N.V. or the notes, which could affect the ability to convert
the notes and, to the extent the activity occurs during any
observation period related to a conversion of notes, it could
affect the amount of cash holders will receive upon conversion of
the notes.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy the notes or any other securities,
and shall not constitute an offer, solicitation or sale in any
state or jurisdiction in which such an offer, solicitation or sale
would be unlawful.
The offer and sale of the notes are not being registered under
the Securities Act of 1933, as amended, or any state securities
laws. The notes may not be offered or sold in the United States
except pursuant to an exemption from the registration requirements
of the Securities Act and any applicable state securities laws.
About Wright Medical
Wright Medical Group, Inc. is a specialty orthopaedic company
that provides extremity and biologic solutions that enable
clinicians to alleviate pain and restore their patients'
lifestyles. The company is a recognized leader of surgical
solutions for the foot and ankle market, one of the fastest growing
segments in medical technology, and markets its products in over 60
countries worldwide.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking statements,
including statements regarding the estimated net proceeds of the
offering and warrant transaction, the expected effect of the hedge
and warrant transactions, the anticipated strike price of the
warrants and the Company's planned use of the net proceeds from the
sale of the notes, including the potential repayment of up to
approximately $250 million of the Company's outstanding
indebtedness. These statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those described in or implied by the forward-looking
statements, including, without limitation, whether or not the
Company will be able to repay any of its outstanding indebtedness
on acceptable terms, if at all, consummate its transaction with
Tornier, the offering of notes, or the hedge and warrant
transactions on the timelines or with the terms anticipated, if at
all, and, if consummated, whether the hedge and warrant
transactions will have the anticipated effect of reducing the
Company's exposure under the notes to future increases in the price
of the Company's common stock, including whether the warrant strike
price will be $40 per share, which is subject to market conditions.
You are encouraged to read the Company's and Tornier's filings with
the SEC, available at www.sec.gov, for a discussion of these and
other risks and uncertainties. Investors should not place
considerable reliance on the forward-looking statements contained
in this press release. The Company is providing this information as
of the date of this press release and assumes no obligation to
update any forward-looking statement to reflect events or
circumstances occurring after the date of this press release.
CONTACT: Investors & Media:
Julie D. Tracy
Sr. Vice President, Chief Communications Officer
Wright Medical Group, Inc.
(901) 290-5817
julie.tracy@wmt.com
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