Wright Medical Group N.V. Announces Privately Negotiated Exchange of Wright Medical Group, Inc.’s 2.00% Cash Convertible Se...
January 31 2019 - 6:00AM
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 accredited investors (within the
meaning of Rule 501 promulgated under the Securities Act of 1933,
as amended (the “Securities Act”)) and/or qualified institutional
buyers (as defined in Rule 144A under the Securities Act) who are
holders of WMG’s existing 2.00% cash convertible senior notes due
2020 (the “existing notes”) to exchange (the “exchange”)
$112,106,000 aggregate principal amount of existing notes for
$120,223,000 aggregate principal amount of newly issued notes under
WMG’s existing indenture for its 1.625% cash convertible senior
notes due 2023 (the “2023 notes”). For each $1,000 principal amount
of existing notes validly submitted for exchange, WMG will deliver
$1,072.40 principal amount of 2023 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. The
2023 notes are referred to as “exchangeable” in the exchange
agreements with participating investors because they will be issued
by WMG, not the Company. The exchange is expected to close on
February 7, 2019, subject to customary closing conditions. Neither
the Company nor WMG will receive any cash proceeds from the
exchange of existing notes for the 2023 notes.
The additional 2023 notes will be issued pursuant to the
Indenture, dated June 28, 2018, by and among the Company, WMG and
Bank of New York Mellon Trust Company, N.A., governing the 2023
notes (the “Indenture”). After giving effect to the
issuance of the 2023 notes and the exchange of the Existing Notes
pursuant to the exchange, $795,233,000 aggregate principal amount
of the 2023 notes is expected to be issued and outstanding under
the Indenture and $74,483,000 aggregate principal amount of the
Existing Notes is expected to remain issued and outstanding.
In connection with the issuance of the new 2023 notes offered in
the exchange, 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 newly issued 2023 notes to the extent
that such cash payments exceed the principal amount of such
converted 2023 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
36.3% higher than the last reported sale price of the Company’s
ordinary shares on January 30, 2019, 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.
WMG intends to pay approximately $26.0 million in the aggregate
to the option counterparties for the note hedge transactions, and
receive approximately $18.3 million in the aggregate from the
option counterparties for the warrants, resulting in a net cost to
the Company of approximately $7.7 million.
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 exchange. These hedging activities could
increase (or reduce the size of any decrease in) the market price
of the Company’s ordinary shares or the 2023 notes.
In addition, the option counterparties or their respective
affiliates may modify their hedge positions following the pricing
of the exchange 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 2023
notes). This activity could impact the market price of the
Company’s ordinary shares or the 2023 notes, which could affect the
ability to convert the 2023 notes and, to the extent the activity
occurs during any observation period related to a conversion of
2023 notes, it could affect the amount of cash holders will receive
upon conversion of the 2023 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 2023 notes.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy the 2023 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 exchange, including the offer and sale of the 2023 notes
have not been registered under the Securities Act or any state
securities laws. The 2023 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 expected effect of the hedge and
warrant transactions and the timing and principal amounts to be
exchanged in the exchange. 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 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 2023 notes to future increases in
the price of the Company’s ordinary shares. 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. Dewey Sr. 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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