Item 1.01
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Entry into a Material Definitive Agreement.
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On May 15, 2020, Cantel Medical Corp., a
Delaware corporation (the “Company”), closed its previously announced issuance and sale of $140 million aggregate principal
amount of the Company’s 3.25% Convertible Senior Notes due 2025 (the “Notes”). The estimated net proceeds from
the offering were approximately $135.8 million, after deducting the initial purchasers’ discount and before the cost of the
offering expenses payable by the Company.
The Notes are governed by the terms of an
indenture, dated as of May 15, 2020 (the “Indenture”), between the Company and Wells Fargo Bank, National Association,
as trustee (the “Trustee”). The Notes are unsecured, unsubordinated obligations of the Company. The Notes bear interest
at a rate of 3.25% per annum, payable semi-annually in arrears on each May 15 and November 15, commencing on November 15, 2020.
The Notes will mature on May 15, 2025, unless earlier converted, redeemed or repurchased. The Notes will be convertible at an initial
conversion rate of 24.0912 shares of common stock of the Company, par value $0.10 per share (the “Common Stock”), per
$1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $41.51 per share of Common Stock,
which represents a premium of approximately 30% to the last reported sale price per share of Common Stock of $31.93 on May 12,
2020). The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not
limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business
day immediately preceding February 15, 2025, holders may convert their Notes at their option only under the following circumstances:
·
during any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar
quarter), if the last reported sale price of the Common Stock for at least 20 trading days (whether or not consecutive) during
a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter
is equal to or greater than 130% of the conversion price then in effect on each applicable trading day;
·
during the five business day period immediately after any five consecutive trading day period (the “measurement period”)
in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98%
of the product of the last reported sale price of the Common Stock and the conversion rate on such trading day;
·
if the Company calls any or all of the Notes for redemption, at any time prior to the close of business on the business
day immediately prior to the redemption date, but only with respect to the Notes called for redemption; or
·
upon the occurrence of specified corporate events.
Irrespective of the foregoing conditions,
holders may convert their Notes on or after February 15, 2025 and prior to the close of business on the second scheduled trading
day immediately preceding the maturity date. If a make-whole fundamental change (as described in the Indenture) occurs, or if the
Company calls the Notes for redemption, and a holder elects to convert its Notes in connection with such make-whole fundamental
change or during the related redemption period, as the case may be, such holder may be entitled to an increase in the conversion
rate in certain circumstances as described in the Indenture. Upon conversion, the Company will satisfy its conversion obligation
by paying or delivering, as the case may be, cash, shares of Common Stock or a combination of cash and shares of Common Stock,
at the Company’s election.
The Notes will not be redeemable by the
Company prior to May 17, 2023. On or after May 17, 2023, if the last reported sale price per share of 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 the Company provides notice of redemption, the Company may redeem for cash all or part of the Notes at a redemption
price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding,
the redemption date, except as otherwise described in the Indenture.
No “sinking fund” is provided
for the Notes. If the Company undergoes a fundamental change at any time prior to the maturity of the Notes, subject to certain
conditions set forth in the Indenture, holders of the Notes will have the right, at their option, to require the Company to repurchase
for cash all or a part of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased,
plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date, except as otherwise described
in the Indenture.
The Indenture does not contain any financial
or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase
of securities by the Company or any of its subsidiaries. The Indenture contains customary terms and covenants and events of default.
If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving the Company) occurs and
is continuing, the Trustee by notice to the Company, or the holders of at least 25% in principal amount of the outstanding Notes
by notice to the Company and the Trustee, may declare 100% of the principal of, and accrued and unpaid interest on, all the Notes
to be due and payable. Upon any such declaration of acceleration, such principal and accrued and unpaid interest, if any, will
be due and payable immediately. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving the
Company, 100% of the principal of and accrued and unpaid interest, if any, on all of the Notes will become due and payable automatically.
Notwithstanding the foregoing, the Indenture
provides that, to the extent the Company elects, the sole remedy for an event of default relating to certain failures by the Company
to comply with certain reporting covenants in the Indenture shall, for the first 360 days after the occurrence of such an event
of default, consist exclusively of the right of holders to receive additional interest on the Notes.
The above description of the Indenture and
the Notes is a summary only and is qualified in its entirety by reference to the Indenture (and the Form of Global Note included
therein), which is attached hereto as Exhibit 4.1 and is incorporated herein by reference.