Invacare Corporation (NYSE: IVC) (the “Company”) entered into
separate, privately negotiated agreements with certain holders of
its 5.0% Convertible Senior Notes due 2021 (the “2021 Notes”) and
certain holders of its 4.5% Convertible Senior Notes due 2022 (the
“2022 Notes”) to exchange approximately $32.9 million in aggregate
principal amount of 2021 Notes and $38.5 million in aggregate
principal amount of 2022 Notes, for aggregate consideration of
approximately $71.4 million in aggregate principal amount of new
5.0% Series II Convertible Senior Exchange Notes due 2024 (the “New
Notes”). Exchanging holders of the 2021 Notes received an equal
principal amount of New Notes, plus an amount of cash equal to the
accrued and unpaid interest on the exchanged 2021 Notes up to, but
excluding the closing date and approximately $3.9 million in cash.
Exchanging holders of the 2022 Notes received an equal principal
amount of New Notes, plus an amount of cash equal to the accrued
and unpaid interest on the exchanged 2022 Notes up to, but
excluding the closing date and approximately $1.3 million in cash.
Following the closing of these transactions, $28.2 million in
aggregate principal amount of the 2021 Notes and $81.5 million in
aggregate principal amount of the 2022 Notes will remain
outstanding with terms unchanged. The exchange is expected to close
on June 4, 2020, subject to customary closing conditions.
The New Notes will bear interest at a rate of 5.0% per year
payable semi-annually in arrears on May 15 and November 15 of each
year, beginning November 15, 2020. Interest on the New Notes will
accrue from June 4, 2020. The principal amount of the New Notes
also will accrete at a rate of approximately 4.7% per year
commencing June 4, 2020, compounding on a semi-annual basis. The
accreted portion of the principal is payable in cash upon maturity
but does not bear interest and is not convertible into the
Company’s common shares. The New Notes will mature on November 15,
2024, unless earlier repurchased, redeemed or converted.
The conversion rate for the New Notes will initially be 67.6819
of the Company’s common shares per $1,000 principal amount of New
Notes (equivalent to an initial conversion price of approximately
$14.78 per common share). The initial conversion price of the New
Notes represents a premium of approximately 140% to the $6.16 per
share last reported sale price of the Company’s common shares on
May 29, 2020. The New Notes will be convertible at the option of
the holders in certain circumstances into cash, common shares or a
combination of cash and common shares, at the Company’s election.
With the New Notes having a significant conversion premium, this
implies an incremental increase of approximately 484,000 common
shares, or approximately 1.4% compared to the common shares
underlying the notes to be exchanged.
The New Notes provide the Company with the option, at its
election, to redeem the New Notes in whole or in part for cash,
prior to maturity, if the last reported sale price of the Company’s
common shares equals or exceeds 130% of the then applicable
conversion price for the required measurement period, at a
redemption price equal to 100% of the accreted principal amount of
New Notes to be redeemed, plus any accrued and unpaid interest, if
any, on the original principal amount of New Notes redeemed.
Prior to May 15, 2024, the New Notes will be convertible only
upon satisfaction of certain conditions and during certain periods,
and thereafter, at any time until the close of business on the
second scheduled trading day immediately preceding the maturity
date. Upon conversion, the New Notes may be settled in cash, the
Company’s common shares or a combination of cash and the Company’s
common shares, at the Company’s election. In addition, following
(i) a redemption of the New Notes by the Company at its election or
(ii) certain corporate events that occur prior to the maturity date
of the New Notes, the Company will pay a make-whole premium by
increasing the conversion rate for a holder who elects to convert
its New Notes in connection with such a redemption or corporate
event in certain circumstances. If the Company undergoes a
“fundamental change”, holders of the New Notes will have the right
to require the Company to repurchase all or some of their New Notes
at 100% of the accreted principal amount of New Notes to be
repurchased, plus any accrued and unpaid interest, if any, on the
original principal amount of New Notes repurchased.
When issued, the New Notes will be the Company’s senior
unsecured obligations and will rank senior in right of payment to
any of the Company’s unsecured indebtedness that is expressly
subordinated in right of payment to the notes; equal in right of
payment to any of the Company’s unsecured indebtedness that is not
so subordinated, including the 2021 Notes, the 2022 Notes and the
Company’s 5.00% Convertible Senior Exchange Notes due 2024 issued
in November 2019; effectively junior in right of payment to any of
the Company’s secured indebtedness to the extent of the value of
the assets securing such indebtedness; and structurally junior to
all indebtedness and other liabilities (including trade payables)
of the Company’s subsidiaries.
The New Notes and the Company’s common shares that may be
issuable upon conversion of the New Notes are not being registered
under the Securities Act, or the securities laws of any other
jurisdiction and, unless so registered, may not be offered or sold
in the United States except in transactions exempt from, or not
subject to, the registration requirements of the Securities Act and
any applicable state securities laws.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction.
About Invacare Corporation
Invacare Corporation (NYSE: IVC) is a leading manufacturer and
distributor in its markets for medical equipment used in non-acute
care settings. At its core, the Company designs, manufactures, and
distributes medical devices that help people to move, breathe, rest
and perform essential hygiene. The Company provides clinically
complex medical device solutions for congenital (e.g., cerebral
palsy, muscular dystrophy, spina bifida), acquired (e.g., stroke,
spinal cord injury, traumatic brain injury, post-acute recovery,
pressure ulcers) and degenerative (e.g., ALS, multiple sclerosis,
chronic obstructive pulmonary disease, age related, bariatric)
conditions. The Company’s products are important parts of care for
people with a wide range of challenges, from those who are active
and involved in work or school each day and may need additional
mobility or respiratory support, to those who are cared for in
residential care settings, at home and in rehabilitation centers.
The Company sells its products principally to home medical
equipment providers with retail and e-commerce channels,
residential care operators, distributors and government health
services in North America, Europe and Asia Pacific.
Forward-Looking Statements
This press release contains “forward-looking statements”. All
statements, other than statements of historical facts, included in
this press release may be deemed forward-looking statements. The
Company uses the words “anticipate(s),” “believe(s),”
“estimate(s),” “expect(s),” “intend(s),” “may,” “plan(s),”
“project(s),” “will,” “would” and similar expressions to identify
forward-looking statements, although not all forward-looking
statements contain these identifying words. These statements
relating to the offering of the notes include, but are not limited
to: whether the Company will consummate the exchange transactions
on the proposed terms, or at all; whether the New Notes will be
convertible into the Company’s common shares, or convertible at
all. Forward-looking statements by their nature address matters
that are, to different degrees, uncertain. Specific risks and
uncertainties that could cause actual results to differ materially
from those expressed in the Company’s forward-looking statements
include: changes in market conditions and demands on the Company’s
cash. Other risks include those described in the “Risk Factors”
section of the Company’s Annual Report on Form 10-K for the year
ended December 31, 2019, as updated by, and as otherwise described
in, the Company’s subsequent reports filed with the SEC. These
risks and uncertainties may cause the Company’s actual future
actions or results to differ materially from those expressed in the
forward-looking statements. Forward-looking statements speak only
as to the date on which they are made, and, except as may be
required by law, the Company undertakes no obligation to update
publicly or revise any forward-looking statement, regardless of
whether new information becomes available, future developments
occur or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20200601005243/en/
Investor Contact: Lois Lee loislee@invacare.com (440)
329-6435
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