Wright Medical Group N.V. (NASDAQ:WMGI) (the “Company”) today
announced that it has entered into privately negotiated agreements
among the Company, Wright Medical Group, Inc., an indirect,
wholly-owned subsidiary of the Company (“WMG”), and 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 $675 million aggregate principal
amount of WMG’s 1.625% cash convertible senior notes due 2023 (the
“notes”). The notes are referred to as “exchangeable” in the
offering documents because they will be issued by WMG, not the
Company. The issuance of the notes is expected to close on June
28, 2018, subject to customary closing conditions.
The notes will be senior unsecured obligations of WMG and pay
interest semiannually in arrears at a rate of 1.625% per annum on
June 15 and December 15 of each year, beginning on December 15,
2018. The notes will be fully and unconditionally guaranteed by the
Company on a senior unsecured basis. Prior to December 15, 2023,
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 June 15, 2023. The
initial conversion rate for the notes is 29.9679 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 $33.37 per ordinary share, representing an
approximately 22.5% conversion premium based on the last reported
sale price of the Company’s ordinary shares of $27.24 per ordinary
share on June 20, 2018, 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 WMG’s existing 2.00% cash
convertible senior notes due 2020 (the “existing notes”) have
entered into privately negotiated agreements to exchange
approximately $401 million aggregate principal amount of their
existing notes for approximately $460 million aggregate principal
amount of the notes (the “exchange”). For each $1,000
principal amount of existing notes validly submitted for exchange,
WMG will deliver $1,146.10 principal amount of notes to the
exchanging investor (subject, in each case, to rounding to the
nearest $1,000 aggregate principal amount for each such exchanging
investor). There will be no separate cash payment in respect of
rounded amounts or interest, if any, accrued and unpaid to the
closing date of the exchange.
In connection with the issuance of the notes, WMG and the
Company have 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 WMG 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 $40.86 per ordinary share, or approximately
50% higher than the last reported sale price of the Company’s
ordinary shares on June 20, 2018, 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 $200 million, after deducting estimated fees and
expenses payable by the Company. Neither the Company nor WMG will
receive any cash proceeds from the concurrent exchange of notes for
existing notes. The Company expects to use approximately $39
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 $161
million net proceeds from the issuance for general corporate
purposes, which may include, among other uses, repayment or
repurchase of outstanding indebtedness.
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.
In addition, in connection with the exchange, the Company and
WMG expect to enter into agreements with the counterparties (the
“existing option counterparties”) to WMG’s existing convertible
note hedge transactions to terminate a portion of such existing
convertible note hedge transactions in a notional amount
corresponding to the amount of the existing notes exchanged (the
“unwind agreements”). Pursuant to the unwind agreements, the
existing option counterparties will also terminate a portion of the
Company’s existing warrant transactions in respect of the existing
notes with the existing option counterparties. In connection with
any termination of existing convertible note hedge and existing
warrant transactions and the related unwinding of the existing
hedge position of the existing option counterparties with respect
to such transactions, such existing option counterparties and/or
their respective affiliates may sell the Company’s ordinary shares
in secondary market transactions, and/or enter into or unwind
various derivative transactions with respect to the Company’s
ordinary shares. Any of these activities could decrease (or reduce
the size of any increase in) the market price of the Company’s
ordinary shares at that time and it could decrease (or reduce the
size of any increase in) the market value of the notes offered
hereby.
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. Wright 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 orthopaedics. For more information about Wright, visit
www.wright.com.
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. Management retains broad
discretion over the use of proceeds from the sale of the notes. 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. DeweySr. Vice President, Chief Communications
OfficerWright Medical Group N.V.(901)
290-5817julie.dewey@wright.com
Wright Medical Group NV (NASDAQ:WMGI)
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