Wright Medical Group, Inc. Prices $550 Million Cash Convertible Senior Notes Offering
February 10 2015 - 7:00AM
Wright Medical Group, Inc. (Nasdaq:WMGI) (the "Company") today
announced the pricing of its offering of $550 million aggregate
principal amount of cash convertible senior notes due 2020 ("the
notes"). The notes were sold to initial purchasers who are
reselling the notes to qualified institutional buyers pursuant to
Rule 144A under the Securities Act of 1933, as amended. The Company
also granted the initial purchasers a 30-day option to purchase up
to an additional $82.5 million aggregate principal amount of notes
solely to cover over-allotments. The offering is expected to close
on February 13, 2015, subject to customary closing conditions.
The notes will be senior unsecured obligations and pay interest
semiannually in arrears at a rate of 2.00% per annum on February 15
and August 15 of each year, beginning on August 15, 2015. Prior to
August 15, 2019, the notes will be convertible into cash at the
option of the holder under certain conditions and, thereafter until
the close of business on the business day immediately preceding the
maturity date, at any time. The notes mature on February 15, 2020.
The initial conversion rate for the notes is 32.3939 shares of the
Company's common stock per $1,000 principal amount of the notes,
which is equivalent to a conversion price of approximately $30.87
per share of the Company's common stock, representing an
approximately 22.50% conversion premium based on the last reported
sale price of the Company's common stock of $25.20 per share on
February 9, 2015. The notes will be subject to modifications 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 upon consummation of the merger, Wright
N.V. will fully and unconditionally guarantee the Company's
obligations under the indenture and 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 the Wright N.V.'s ordinary
shares. In connection with the sale of the notes, the Company has
entered into 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 has entered into separate privately
negotiated warrant transactions with the option counterparties, and
the warrants have a strike price of $40, or approximately 59%
higher than the last reported sale price per share of the Company's
common stock on February 9, 2015. 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.
It is expected that the cash convertible note hedge and warrant
transactions will be subject to certain modifications upon
consummation of the Tornier merger transaction.The Tornier merger
transaction is not expected to be a "fundamental change" or
"make-whole fundamental change" under the indenture governing the
notes. In addition, at and after the consummation of the Tornier
merger transaction, it is expected that the 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 $533
million (or $613 million if the initial purchasers exercise their
over-allotment option in full), after deducting the initial
purchasers' discounts and commissions and estimated offering
expenses. The Company expects to use approximately $51 million
of the net proceeds from the offering (or $58 million if the
initial purchasers exercise their over-allotment option in full) 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 also expects to use
approximately $292 million of the net proceeds of the offering to
repurchase approximately $240 million aggregate principal amount of
the Company's outstanding 2.00% cash convertible senior notes due
2017 in privately negotiated transactions and the remaining net
proceeds from the offering for general corporate purposes,
including possible acquisitions.
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 Tornier ordinary shares, other securities of
Tornier 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 have not been 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 and the Company's planned use of the net
proceeds from the sale of the notes. 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 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. 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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