Adesto Technologies Corporation (Nasdaq: IOTS) announced today the
pricing of $70.0 million aggregate principal amount of 4.25%
Convertible Senior Notes due 2024 (the “
notes”) in
a private offering to qualified institutional buyers pursuant to
Rule 144A (“
Rule 144A”) promulgated under the
Securities Act of 1933, as amended (the “
Act”)
(such offering, the “
offering”). Adesto also
granted the initial purchasers of the notes a 13-day option to
purchase up to an additional $10.5 million aggregate principal
amount of the notes. The sale is expected to close on September 23,
2019, subject to customary closing conditions.
The notes will be senior, unsecured obligations
of Adesto, and will bear interest at 4.25% per year payable
semiannually in arrears. The notes will mature on September 15,
2024, unless earlier converted, redeemed or repurchased. Prior to
June 15, 2024, the notes will be convertible at the option of
holders of the notes only under certain circumstances, and
thereafter, at any time prior to the close of business on the
business day immediately preceding the maturity date. Upon
conversion, the notes may be settled in shares of Adesto common
stock, cash, or a combination thereof, at the election of
Adesto.
Adesto may not redeem the notes prior to
September 20, 2022. Adesto may redeem for cash all or part of the
notes, at the election of Adesto, on a redemption date on or after
September 20, 2022 and on or before the 35th scheduled trading day
immediately before the maturity date if the last reported sale
price of Adesto’s common stock has been at least 130% of the
conversion price then in effect for at least 20 trading days
(whether or not consecutive) during any 30 consecutive trading day
period (including the last trading day of such period) ending on,
and including, the trading day immediately preceding the date on
which Adesto provides notice of redemption at a redemption price
equal to 100% of the principal amount of the notes to be redeemed,
plus accrued and unpaid interest to, but excluding, the redemption
date. Holders of the notes will have the right to require Adesto to
repurchase for cash all or part of their notes at a repurchase
price equal to 100% of their principal amount, plus accrued and
unpaid interest to, but excluding, the repurchase date upon the
occurrence of a fundamental change (as defined in the indenture
relating to the notes).
The conversion rate for the notes will initially
be 83.3021 shares of Adesto common stock per $1,000 principal
amount of notes (equivalent to an initial conversion price of
approximately $12.00 per share of Adesto common stock). The initial
conversion price of the notes represents a premium of approximately
32.5% to the $9.06 per share closing price of Adesto common stock
on the Nasdaq Capital Market on September 18, 2019. In addition,
following certain corporate events that occur prior to the maturity
date or if Adesto delivers a notice of redemption, Adesto will, in
certain circumstances, increase the conversion rate for a holder
who elects to convert its notes in connection with such a corporate
event or notice of redemption, as the case may be.
Adesto estimates that the net proceeds from the
offering will be approximately $66.7 million (or $76.8 million if
the initial purchasers exercise their option to purchase additional
notes in full), after deducting the initial purchasers’ discount
and estimated offering expenses payable by Adesto. Adesto expects
to use approximately $35.5 million of the net proceeds from the
offering to repay in full Adesto’s existing term loan and
approximately $5.3 million of the net proceeds from the offering of
the notes to pay the cost of the capped call transactions described
below.
Adesto expects to use the remainder of the net
proceeds from the offering for general corporate purposes, which
may include investments, acquisitions, or other strategic
transactions. However, Adesto has not designated any specific uses
and has no current agreements or commitments with respect to any
material investment, acquisition, or strategic transaction.
If the initial purchasers exercise their option
to purchase additional notes, Adesto expects to use approximately
$0.8 million of the net proceeds from the sale of additional notes
to enter into additional capped call transactions with the option
counterparties (as defined below). Any remaining net proceeds from
the sale of additional notes will be used for general corporate
purposes.
In connection with the pricing of the notes,
Adesto has entered into privately negotiated capped call
transactions with certain financial institutions (the “option
counterparties”). The capped call transactions are expected
generally to offset potential dilution to holders of Adesto’s
common stock as a result of any conversion of the notes, with such
offset subject to a cap based on the cap price. The cap price of
the capped call transactions will initially be approximately $15.86
per share, which represents a premium of approximately 75.0% over
the per share closing price of Adesto’s common stock of $9.06 per
share on September 18, 2019, and is subject to certain adjustments
under the terms of the capped call transactions.
In connection with establishing their initial
hedges of the capped call transactions, Adesto expects that the
option counterparties and/or their respective affiliates will
purchase shares of Adesto common stock and/or enter into various
derivative transactions with respect to Adesto common stock
concurrently with or shortly after the pricing of the notes. This
activity could increase (or reduce the size of any decrease in) the
market price of Adesto common stock or the notes at that time.
In addition, Adesto expects that the option
counterparties and/or their respective affiliates may modify their
hedge positions by entering into or unwinding various derivatives
with respect to Adesto common stock and/or purchasing or selling
Adesto common stock in secondary market transactions following the
pricing of the notes and prior to the maturity of the notes (and
are likely to do so on each exercise date for the capped call
transactions or following any termination of any portion of the
capped call transactions in connection with any repurchase,
redemption or conversion of notes by Adesto). This activity could
also cause or avoid an increase or decrease in the market price of
Adesto common stock or the notes, which could affect holders’
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 and value of the consideration that holders
will receive upon conversion of such notes.
This press release is neither an offer to sell
nor a solicitation of an offer to buy any of these securities
(including the shares of Adesto common stock, if any, into which
the notes are convertible) and shall not constitute an offer,
solicitation or sale in any jurisdiction in which such offer,
solicitation or sale is unlawful. Any offers of the notes will be
made only to qualified institutional buyers pursuant to Rule 144A
by means of a private offering memorandum.
The notes and any shares of Adesto common stock
issuable upon conversion of the notes have not been and will not be
registered under the Act, or any state securities laws and may not
be offered or sold in the United States absent registration or an
applicable exemption from such registration requirements.
Use of forward looking
statements
This press release contains “forward-looking
statements” including, among other things, statements relating to
the completion, timing and size of the offering, the potential
effects of entering into the capped call transactions, and the
expected use of proceeds from the offering. Statements containing
words such as “could,” “believe,” “expect,” “intend,” “will,” or
similar expressions constitute forward-looking statements. These
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These statements involve risks and uncertainties that could cause
actual results to differ materially, including, but not limited to,
whether Adesto will consummate the offering, prevailing market
conditions, the anticipated use of the proceeds of the offering,
which could change as a result of market conditions or for other
reasons, the impact of general economic, industry or political
conditions in the United States or internationally, and the actions
of the option counterparties and their respective affiliates and
whether the capped call transactions will become effective. The
foregoing list of risks and uncertainties is illustrative, but is
not exhaustive. For information about other potential factors that
could affect Adesto’s business and financial results, please review
the “Risk Factors” described in Adesto’s Annual Report on Form 10-K
for the year ended December 31, 2018 and Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2019 filed with the
Securities and Exchange Commission, or SEC, and in Adesto’s other
filings with the SEC. Except as may be required by law, Adesto
undertakes no obligation, and does not intend, to update these
forward-looking statements after the date of this release.
Source: Adesto Technologies Corporation
Adesto Media ContactJen
Bernier-Santarini+1 650-336-4222Jen.bernier@adestotech.com
Adesto Investor
Relations:Leanne K. SieversShelton
Group+1-949-224-3874sheltonir@sheltongroup.com
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