Wright Medical Group, Inc. Announces Proposed Private Placement of Cash Convertible Senior Notes
MEMPHIS, Tenn., Feb. 9, 2015 (GLOBE NEWSWIRE) — Wright Medical Group, Inc. (Nasdaq:WMGI) (the “Company”) today announced its intention to commence an offering, subject to market and other conditions, of $400 million aggregate principal amount of cash convertible senior notes due 2020 (the “notes”), to be offered and sold to initial purchasers who would resell the notes to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Company intends to grant the initial purchasers a 30-day option to purchase up to an additional $60 million aggregate principal amount of notes solely to cover over-allotments.
The notes would be senior unsecured obligations and pay interest semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2015. The notes would be convertible into cash under certain conditions and during certain periods based on the value of the Company’s common stock. The interest rate, conversion rate, conversion price and other terms of the notes are to be determined by negotiations among the Company and the initial purchasers of the notes. The notes will be subject to modification upon the consummation of the Company’s pending merger with Tornier N.V. (“Tornier,” which will be known as Wright Medical Group N.V. (“Wright N.V.”) at and after the effective time of the Tornier merger), including that following the consummation of the merger, Wright N.V. will fully and unconditionally guarantee the notes on a senior unsecured basis, and calculations and other determinations with respect to the notes relating to the Company’s common stock will instead be calculated or determined by reference to Wright N.V.’s ordinary shares.
In connection with the pricing of the notes, the Company intends to enter into one or more privately negotiated cash convertible note hedge transactions with certain financial institutions (the “option counterparties”). The cash convertible note hedge transactions are intended to reduce the net amount of cash payments that the Company 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 intends to enter into separate privately negotiated warrant transactions with the option counterparties and anticipates that the warrants will have a strike price of approximately $40 per share. The issuance of the warrants could have a dilutive effect on the Company’s common stock to the extent that the market price per share of the Company’s common stock exceeds the applicable strike price of the warrants. If the initial purchasers exercise their option to purchase additional notes, the Company intends to enter into additional cash convertible note hedge and warrant transactions.
The cash convertible note hedge and warrant transactions will be subject to certain modifications upon consummation of the Tornier merger transaction, but is not expected to be a “fundamental change” or “make-whole fundamental change” under the indenture governing the notes. In addition, following the consummation of the Tornier merger transaction, Wright N.V. will assume the Company’s obligations under the warrant transactions, and calculations and other determinations with respect to the cash convertible note hedge and warrant transactions relating to the Company’s common stock will instead be calculated or determined by reference to Wright N.V.’s ordinary shares.
The Company estimates that the net proceeds of the offering will be approximately $389 million (or $447 million if the initial purchasers’ option to purchase additional notes is exercised in full), after deducting the initial purchasers’ discounts and commissions and estimated offering expenses. The Company expects to use a portion of the net proceeds from the offering 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 net proceeds from the offering for general corporate purposes, including possible acquisitions and to repay up to approximately $250 million aggregate principal amount of the Company’s outstanding indebtedness in privately negotiated transactions.
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) expect to enter into various derivative or other hedging transactions with respect to the Company’s common stock 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 common stock 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 (including in connection with the Tornier merger transaction) by entering into or unwinding various derivatives with respect to the Company’s common stock and/or purchasing or selling common stock or other securities of the Company in secondary market transactions (and/or, in each case, upon consummation of the Tornier merger transaction, the ordinary shares or other securities of Wright N.V.) (and are likely to do so during any observation period related to a conversion of notes). This activity could also impact the market price of the Company’s common stock, the Wright N.V. ordinary shares, other securities of Wright N.V. 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.
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 are not being registered under the Securities Act of 1933, as amended, 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
Wright Medical Group, Inc. is a specialty orthopaedic company that provides extremity and biologic solutions that enable clinicians to alleviate pain and restore their patients’ lifestyles. The company is a recognized leader of surgical solutions for the foot and ankle market, one of the fastest growing segments in medical technology, and markets its products in over 60 countries worldwide.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding the estimated net proceeds of the offering and warrant transaction, the expected effect of the hedge and warrant transactions, the anticipated strike price of the warrants and the Company’s planned use of the net proceeds from the sale of the notes, including the potential repayment of up to approximately $250 million of the Company’s outstanding indebtedness. 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 repay any of its outstanding indebtedness on acceptable terms, if at all, consummate its transaction with Tornier, the offering of notes, 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 common stock, including whether the warrant strike price will be $40 per share, which is subject to market conditions. You are encouraged to read the Company’s and Tornier’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. Tracy
Sr. Vice President, Chief Communications Officer
Wright Medical Group, Inc.
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