Wright Medical Group N.V. Announces Private Placement of $395 Million of 2.25% Cash Convertible Senior Notes Due 2021
May 13 2016 - 9:00AM
Wright Medical Group N.V. (NASDAQ:WMGI) (the “Company”) today
announced that it has entered into privately negotiated agreements
with a limited number of investors who are both accredited
investors (within the meaning of Rule 501 promulgated under the
Securities Act of 1933, as amended (the “Securities Act”)) and
qualified institutional buyers (as defined in Rule 144A under the
Securities Act) (the “investors”) to issue and sell $395 million
aggregate principal amount of 2.25% cash convertible senior notes
due 2021 (the “notes”). The issuance of the notes is expected to
close on May 20, 2016, subject to customary closing conditions.
The notes will be senior unsecured obligations and pay interest
semiannually in arrears at a rate of 2.25% per annum on May 15 and
November 15 of each year, beginning on November 15, 2016. Prior to
May 15, 2021, the notes will be convertible at the option of the
holder into cash under certain conditions and, thereafter at any
time until the close of business on the second scheduled trading
day immediately preceding the maturity date. The notes mature on
November 15, 2021. The initial conversion rate for the notes is
46.8165 of the Company’s ordinary shares per $1,000 principal
amount of the notes (subject to certain adjustments), which is
equivalent to a conversion price of approximately $21.36 per
ordinary share, representing an approximately 20% conversion
premium based on the last reported sale price of the Company’s
ordinary shares of $17.80 per ordinary share on May 12, 2016, as
reported on The NASDAQ Global Select Market.
Concurrently with the sale of the notes, a limited number of
investors that are current holders of Wright Medical Group, Inc.’s
existing 2.00% cash convertible senior notes due 2017 (the “2017
notes”) and Wright Medical Group, Inc.’s existing 2.00% cash
convertible senior notes due 2020 (the “2020 notes” and, together
with the 2017 notes, the “existing notes”) have entered into
privately negotiated agreements to exchange their existing notes
for the notes. The Company will not receive any cash proceeds from
the concurrent exchange of notes for approximately $54.4 million
aggregate principal amount of the 2017 notes and approximately
$45.0 million aggregate principal amount of the 2020 notes.
For each $1,000 principal amount of 2017 notes validly submitted
for exchange, the Company will deliver $1,035.40 principal amount
of notes and for each $1,000 principal amount of 2020 notes validly
submitted for exchange, the Company will deliver $990.00 principal
amount of notes (subject, in each case, to rounding down to the
nearest $1,000 principal amount of notes, the difference being
referred as the rounded amount) to the investor plus an amount of
cash equal to the unpaid interest on the applicable existing notes
and the rounded amount.
In connection with the issuance 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
generally 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 to sell the option counterparties warrants to
purchase the Company’s ordinary shares. The warrants have an
initial strike price of $30.00 per ordinary share, or approximately
69% higher than the last reported sale price of the Company’s
ordinary shares on May 12, 2016, subject to certain adjustments
under the terms of the warrant transactions. The issuance of the
warrants could have a dilutive effect on the Company’s ordinary
shares to the extent that the market price per ordinary share
exceeds the applicable strike price of the warrants on any
expiration date of the warrants.
The Company estimates that the net proceeds of the issuance will
be approximately $286.5 million, after deducting estimated fees and
expenses payable by the Company. The Company will not receive any
cash proceeds from the concurrent exchange of notes for existing
notes. The Company expects to use approximately $45.2 million of
the net proceeds from the issuance 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 $241.3 million
net proceeds from the issuance for general corporate purposes.
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) have entered into
various derivative or other hedging transactions with respect to
the Company’s ordinary shares 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 ordinary shares 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 by entering into or unwinding
various derivatives with respect to the Company’s ordinary shares
and/or purchasing or selling ordinary shares or other securities of
the Company in secondary market transactions (and are likely to do
so during any observation period related to a conversion of notes).
This activity could impact the market price of the Company’s
ordinary shares 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 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 Group N.V.
Wright Medical Group N.V. is a global medical device company
focused on extremities and biologics products. The company is
committed to delivering innovative, value-added solutions improving
quality of life for patients worldwide and is a recognized leader
of surgical solutions for the upper extremities (shoulder, elbow,
wrist and hand), lower extremities (foot and ankle) and biologics
markets, three of the fastest growing segments in orthopedics.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking statements,
including statements regarding the estimated net proceeds of the
issuance and warrant transactions, 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 the issuance of
notes, the concurrent exchange 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 ordinary shares. You are encouraged to read the
Company’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.
Investors & Media:
Julie D. Tracy
Sr. Vice President, Chief Communications Officer
Wright Medical Group N.V.
(901) 290-5817
julie.tracy@wright.com
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