CONMED Corporation (NYSE: CNMD) today announced the
pricing of $700 million aggregate principal amount of 2.25%
convertible senior notes due 2027 in a private offering to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). In
connection with the offering of the notes, CONMED has granted the
initial purchasers an option to purchase, for settlement within a
13-day period beginning on, and including, the first day on which
the notes are issued, up to an additional $100 million aggregate
principal amount of the notes. The offering of the notes and the
convertible note hedge and warrant transactions described below are
expected to close on June 6, 2022, subject to customary closing
conditions.
The notes will be CONMED’s general senior unsecured obligations
and will rank equally in right of payment with all of CONMED’s
existing and future unsubordinated debt (including the Existing
Notes (as defined below)) and senior in right of payment to all of
CONMED’s future subordinated debt. The notes will be effectively
subordinated to all of CONMED’s existing and future secured debt,
including any borrowings outstanding under its credit facilities,
to the extent of the value of the assets securing such
indebtedness. The notes will be structurally subordinated to all of
CONMED’s subsidiaries’ existing and future liabilities and
obligations.
The notes will pay interest semi-annually on June 15 and
December 15 of each year, beginning on December 15, 2022, at a rate
of 2.25% per year. The notes will mature on June 15, 2027, unless
redeemed, repurchased or converted earlier in accordance with their
terms. The initial conversion rate for the notes will be 6.8810
shares per $1,000 principal amount of notes, which is equivalent to
an initial conversion price of approximately $145.33 per share of
CONMED common stock and is subject to adjustment under the terms of
the notes. The initial conversion price of the notes represents a
premium of approximately 30.0% to the last reported sale price of
$111.79 per share of CONMED’s common stock on the NYSE on June 1,
2022. Prior to March 15, 2027, the notes will be convertible only
upon satisfaction of certain conditions and during certain periods,
and, thereafter, the notes will be convertible at any time until
the close of business on the second scheduled trading day
immediately preceding the maturity date. Upon conversion, CONMED
will pay cash up to the aggregate principal amount of the notes to
be converted and pay or deliver, as the case may be, cash, shares
of CONMED’s common stock or a combination of cash and shares of
common stock, at its election, in respect of the remainder, if any,
of its conversion obligation in excess of the aggregate principal
amount of the notes being converted.
CONMED intends to use approximately $101 million of the net
proceeds from the offering of the notes to pay the cost of
convertible note hedge transactions entered into in connection with
the offering (after such cost is partially offset by the proceeds
from concurrent warrant transactions). CONMED intends to use a
portion of the remaining net proceeds from the offering to
repurchase or exchange a portion of its 2.625% convertible senior
notes due 2024 (the “Existing Notes”). CONMED intends to use the
remaining net proceeds to pay a portion of the cash consideration
for its recently announced acquisition of In2Bones Global, Inc. and
to repay a portion of indebtedness outstanding under its credit
facilities.
If the option granted to the initial purchasers to purchase
additional notes is exercised, CONMED may sell additional warrants
and CONMED may use a portion of the proceeds from the sale of such
additional notes, together with the proceeds from the sale of the
additional warrants, to enter into additional convertible note
hedge transactions.
In connection with the pricing of the notes, CONMED has entered
into privately negotiated convertible note hedge transactions with
one or more of the initial purchasers and/or their respective
affiliates (the “option counterparties”). The convertible note
hedge transactions will cover, subject to customary anti-dilution
adjustments substantially similar to those applicable to the notes,
the same number of shares of CONMED’s common stock that will
initially underlie the notes, and are expected generally to reduce
the potential dilution to CONMED’s common stock and/or offset any
potential cash payments CONMED is required to make in excess of the
principal amount upon conversion of the notes in the event that the
market price of CONMED’s common stock is greater than the strike
price of the convertible note hedge transactions. CONMED has also
entered into warrant transactions with the option counterparties
relating to the same number of shares of CONMED’s common stock,
subject to customary anti-dilution adjustments. The warrant
transactions could separately have a dilutive effect if the market
price of CONMED’s common stock exceeds the strike price of the
warrant transactions. The strike price of the warrant transactions
will initially be approximately $251.53 per share, which represents
a premium of 125.0% over the last reported sale price of CONMED’s
common stock on June 1, 2022, and is subject to certain adjustments
under the terms of the warrant transactions.
CONMED has been advised by the option counterparties that, in
connection with establishing their initial hedge position with
respect to the convertible note hedge transactions and warrant
transactions, the option counterparties and/or their respective
affiliates expect to purchase shares of CONMED’s common stock in
secondary market transactions and/or enter into various derivative
transactions with respect to CONMED’s common stock concurrently
with, or shortly after, the pricing of the notes, including with
certain investors in the notes. This activity could increase (or
reduce the size of any decrease in) the market price of CONMED’s
common stock or the notes at that time.
CONMED has also been advised by the option counterparties that
the option counterparties or their respective affiliates may modify
their hedge positions by entering into or unwinding various
derivative transactions with respect to CONMED’s common stock
and/or purchasing or selling CONMED’s common stock or other of
CONMED’s securities or instruments, including the notes, in
secondary market transactions following the pricing of the notes
and prior to the maturity of the notes.
The option counterparties may choose to engage in, or to
discontinue engaging in, any of these transactions with or without
notice at any time, and their decisions will be in their sole
discretion. The effect, if any, of such activities of the option
counterparties, including direction or magnitude, on the market
price of CONMED’s common stock or the price of the notes will
depend on a variety of factors, including market conditions, and
cannot be ascertained at this time.
In addition, pursuant to separate and individually negotiated
private transactions with certain holders of the Existing Notes,
CONMED has agreed to repurchase or exchange approximately $275
million aggregate principal amount of the Existing Notes for
aggregate consideration consisting of approximately $277.5 million
in cash, which includes accrued interest, and approximately 0.9
million shares of CONMED’s common stock. CONMED expects that
certain holders of Existing Notes that sell their Existing Notes to
CONMED, or exchange their Existing Notes with CONMED, may have
hedged their equity price risk with respect to such notes and will
unwind all or a part of their hedge positions by buying CONMED’s
common stock and/or entering into or unwinding various derivative
transactions with respect to CONMED’s common stock. The amount of
CONMED’s common stock to be purchased by the hedged holders may be
substantial in relation to the historic average daily trading
volume. In addition, CONMED has entered into agreements with the
dealers party to certain convertible note hedge transactions
related to the Existing Notes (the “Existing Note Hedges”) to
terminate a corresponding portion of those Existing Note Hedges. In
connection with such terminations, CONMED will receive cash in an
amount to be determined in accordance with the termination
agreements, which CONMED intends to use for general corporate
purposes. CONMED also entered into agreements with those dealer
counterparties to unwind certain warrant transactions sold at the
time of issuance of the Existing Notes.
The repurchase or exchange of the Existing Notes, and the
potential related market activities by holders of the Existing
Notes participating in the concurrent existing note transactions
could increase (or reduce the size of any decrease in) the market
price of the common stock and may have increased the initial
conversion price of the Notes. In addition, the terminations of the
Existing Note Hedges and related market activities could impact the
market price of the common stock following the offering during the
applicable unwind period. The Issuer cannot predict the magnitude
of such market activity or the overall effect it will have on the
price of the Notes or the common stock.
The notes were offered to qualified institutional buyers
pursuant to Rule 144A under the Securities Act. The offer and sale
of the notes and the shares of common stock issuable upon
conversion of the notes, if any, have not been registered under the
Securities Act or the securities laws of any other jurisdiction,
and the notes and any such shares may not be offered or sold absent
registration or an applicable exemption from such registration
requirements.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy any securities, including the notes
or CONMED common stock, nor shall there be any sale of securities
in any state or jurisdiction in which such an offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such state or jurisdiction.
About CONMED Corporation
CONMED is a medical technology company that provides surgical
devices and equipment for minimally invasive procedures. The
Company’s products are used by surgeons and physicians in a variety
of specialties, including orthopedics, general surgery, gynecology,
thoracic surgery, and gastroenterology.
Forward-Looking Statements
This press release contains forward-looking statements based on
certain assumptions and contingencies that involve risks and
uncertainties, which could cause actual results, performance, or
trends to differ materially from those expressed in the
forward-looking statements herein or in previous disclosures.
Forward-looking statements include, but are not limited to,
statements regarding CONMED’s completion of the offering, the
principal amount of securities sold, CONMED’s anticipated use of
proceeds and the repurchase or exchange of the Existing Notes,
CONMED’s intention to repurchase or exchange Existing Notes and
CONMED’s intention to consummate certain convertible note hedge
transactions related to the Existing Notes to terminate a
corresponding portion of those hedges and to unwind certain warrant
transactions sold at the time of issuance of the Existing Notes. In
addition to general industry and economic conditions, factors that
could cause actual results to differ materially from those in the
forward-looking statements may include, but are not limited to,
CONMED’s ability to meet the closing conditions required for the
consummation of the offering, CONMED’s ability to reach agreements
to repurchase or exchange Existing Notes and terminate such
convertible note hedge transactions and unwind such warrant
transactions and the risk factors discussed in CONMED's Annual
Report on Form 10-K for the fiscal year ended December 31, 2021 and
listed under the heading Forward-Looking Statements in CONMED’s
most recently filed Form 10-Q. Any and all forward-looking
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 and relate to
CONMED’s performance on a going-forward basis. CONMED believes that
all forward-looking statements made by it have a reasonable basis,
but there can be no assurance that management’s expectations,
beliefs or projections as expressed in the forward-looking
statements will actually occur or prove to be correct.
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version on businesswire.com: https://www.businesswire.com/news/home/20220601006313/en/
CONMED Corporation Todd Garner Chief Financial
Officer 727-241-2975 ToddGarner@conmed.com
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