WRIGHT MEDICAL GROUP N.V. AMSTERDAM, The Netherlands, May 13, 2016 (GLOBE NEWSWIRE) -- Wright Medical Group N.V. (NASDAQ:WMGI) (the “Company”) today announced that it has entered into privately negotiated agreements with a limited number of investors who are both accredited investors (within the meaning of Rule 501 promulgated under the Securities Act of 1933, as amended (the “Securities Act”)) and qualified institutional buyers (as defined in Rule 144A under the Securities Act) (the “investors”) to issue and sell $395 million aggregate principal amount of 2.25% cash convertible senior notes due 2021 (the “notes”). The issuance of the notes is expected to close on May 20, 2016, subject to customary closing conditions.
The notes will be senior unsecured obligations and pay interest semiannually in arrears at a rate of 2.25% per annum on May 15 and November 15 of each year, beginning on November 15, 2016. Prior to May 15, 2021, the notes will be convertible at the option of the holder into cash under certain conditions and, thereafter at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The notes mature on November 15, 2021. The initial conversion rate for the notes is 46.8165 of the Company’s ordinary shares per $1,000 principal amount of the notes (subject to certain adjustments), which is equivalent to a conversion price of approximately $21.36 per ordinary share, representing an approximately 20% conversion premium based on the last reported sale price of the Company’s ordinary shares of $17.80 per ordinary share on May 12, 2016, as reported on The NASDAQ Global Select Market.
Concurrently with the sale of the notes, a limited number of investors that are current holders of Wright Medical Group, Inc.’s existing 2.00% cash convertible senior notes due 2017 (the “2017 notes”) and Wright Medical Group, Inc.’s existing 2.00% cash convertible senior notes due 2020 (the “2020 notes” and, together with the 2017 notes, the “existing notes”) have entered into privately negotiated agreements to exchange their existing notes for the notes. The Company will not receive any cash proceeds from the concurrent exchange of notes for approximately $54.4 million aggregate principal amount of the 2017 notes and approximately $45.0 million aggregate principal amount of the 2020 notes. For each $1,000 principal amount of 2017 notes validly submitted for exchange, the Company will deliver $1,035.40 principal amount of notes and for each $1,000 principal amount of 2020 notes validly submitted for exchange, the Company will deliver $990.00 principal amount of notes (subject, in each case, to rounding down to the nearest $1,000 principal amount of notes, the difference being referred as the rounded amount) to the investor plus an amount of cash equal to the unpaid interest on the applicable existing notes and the rounded amount.
In connection with the issuance of the notes, the Company has 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 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 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 $30.00 per ordinary share, or approximately 69% higher than the last reported sale price of the Company’s ordinary shares on May 12, 2016, 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.
The Company estimates that the net proceeds of the issuance will be approximately $286.5 million, after deducting estimated fees and expenses payable by the Company. The Company will not receive any cash proceeds from the concurrent exchange of notes for existing notes. The Company expects to use approximately $45.2 million of the net proceeds from the issuance 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 $241.3 million net proceeds from the issuance for general corporate purposes.
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 notes. These hedging activities could increase (or reduce the size of any decrease in) the market price of the Company’s ordinary shares 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 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 notes). This activity could impact the market price of the Company’s ordinary shares 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 have not been registered under the Securities Act 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 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 and 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 orthopedics.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding the estimated net proceeds of the issuance and warrant transactions, the expected effect of the hedge and warrant transactions and the Company’s planned use of the net proceeds from the sale of the notes. 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 issuance of notes, the concurrent 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 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. Tracy Sr. Vice President, Chief Communications Officer Wright Medical Group N.V. (901) 290-5817 julie.tracy@wright.com
