CONMED Corporation (NASDAQ: CNMD) today announced the
pricing of $300.0 million aggregate principal amount of 2.625%
convertible senior notes due 2024 in a private offering to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). In
connection with the offering of the notes, CONMED has granted the
initial purchasers an option to purchase, during a 13-day period
beginning on, and including, the first day on which the notes are
issued, up to an additional $45.0 million aggregate principal
amount of the notes. The offering of the notes and the convertible
note hedge and warrant transactions described below are expected to
close on January 29, 2019, subject to customary closing
conditions.
The notes will be CONMED’s general senior unsecured obligations
and will rank equally in right of payment with all of CONMED’s
existing and future unsubordinated debt, and senior in right of
payment to all of CONMED’s future subordinated debt. The notes will
be effectively subordinated to all of CONMED’s existing and future
secured debt, including any borrowings outstanding under its credit
facilities, to the extent of the value of the assets securing such
indebtedness. The notes will be structurally subordinated to all of
CONMED’s subsidiaries’ existing and future liabilities and
obligations.
The notes will pay interest semi-annually on February 1 and
August 1 of each year, beginning on August 1, 2019, at a rate of
2.625% per year. The notes will mature on February 1, 2024,
unless earlier repurchased or converted in accordance with their
terms. The conversion rate for the notes will initially be 11.2608
shares per $1,000 principal amount of notes, which is equivalent to
an initial conversion price of approximately $88.80 per share of
CONMED common stock, and is subject to adjustment under the terms
of the notes. The initial conversion price of the notes represents
a premium of approximately 27.5% to the last reported sale price of
$69.65 per share of CONMED’s common stock on the NASDAQ Stock
Market on January 24, 2019. Prior to November 1, 2023,
the notes will be convertible only upon satisfaction of certain
conditions and during certain periods, and thereafter, the notes
will be convertible at any time until the close of business on the
second scheduled trading day immediately preceding the maturity
date. Upon conversion, CONMED will satisfy its conversion
obligation by paying or delivering, as applicable, shares of its
common stock, cash or a combination of shares of its common stock
and cash, at CONMED’s election. Holders of the notes will have the
right to require CONMED to repurchase some or all of their notes
for cash at 100% of their principal amount, plus any accrued and
unpaid interest, upon the occurrence of certain corporate events,
subject to certain conditions.
CONMED intends to use approximately $17.9 million of the net
proceeds from the offering of the notes to pay the cost of certain
convertible note hedge transactions, taking into account the
proceeds to CONMED of certain warrant transactions, each as
described below, and intends to use the remaining net proceeds from
the offering of the notes, together with borrowings under its new
credit facilities and its cash on hand, to finance the acquisition
(the “Buffalo Filter Acquisition”) of Buffalo Filter LLC and
Palmerton Holdings, Inc. The offering of the notes is not
conditioned on the consummation of the Buffalo Filter Acquisition
and there can be no assurance that the Buffalo Filter Acquisition
will be consummated. If the Buffalo Filter Acquisition is not
consummated, CONMED intends to use the remaining net proceeds from
the notes offering for general corporate purposes.
If the option granted to the initial purchasers to purchase
additional notes is exercised, CONMED may sell additional warrants
and CONMED may use a portion of the proceeds from the sale of such
additional notes, together with the proceeds from the sale of the
additional warrants, to enter into additional convertible note
hedge transactions.
In connection with the pricing of the notes, CONMED has entered
into privately negotiated convertible note hedge transactions with
certain of the initial purchasers or their respective affiliates
(the “option counterparties”). The convertible note hedge
transactions will cover, subject to customary anti-dilution
adjustments substantially similar to those applicable to the notes,
the same number of shares of CONMED’s common stock that will
initially underlie the notes, and are expected generally to reduce
the potential dilution to CONMED’s common stock and/or offset any
potential cash payments CONMED is required to make in excess of the
principal amount upon conversion of the notes in the event that the
market price of CONMED’s common stock is greater than the strike
price of the convertible note hedge transactions. CONMED has also
entered into warrant transactions with the option counterparties
relating to the same number of shares of CONMED’s common stock,
subject to customary anti-dilution adjustments. The warrant
transactions could separately have a dilutive effect if the market
price of CONMED’s common stock exceeds the strike price of the
warrant transactions. The strike price of the warrant transactions
will initially be approximately $114.92 per share, which represents
a premium of 65.0% over the last reported sale price of CONMED’s
common stock on January 24, 2019, and is subject to certain
adjustments under the terms of the warrant transactions.
CONMED has been advised by the option counterparties that, in
connection with establishing their initial hedge position with
respect to the convertible note hedge transactions and warrant
transactions, the option counterparties and/or their respective
affiliates expect to purchase shares of CONMED’s common stock in
secondary market transactions and/or enter into various derivative
transactions with respect to CONMED’s common stock concurrently
with, or shortly after, the pricing of the notes, including with
certain investors in the notes. This activity could increase (or
reduce the size of any decrease in) the market price of CONMED’s
common stock or the notes at that time.
CONMED has also been advised by the option counterparties that
the option counterparties or their respective affiliates may modify
their hedge positions by entering into or unwinding various
derivative transactions with respect to CONMED’s common stock
and/or purchasing or selling CONMED’s common stock or other of
CONMED’s securities or instruments, including the notes, in
secondary market transactions following the pricing of the notes
and prior to the maturity of the notes.
The option counterparties may choose to engage in, or to
discontinue engaging in, any of these transactions with or without
notice at any time, and their decisions will be in their sole
discretion. The effect, if any, of such activities of the option
counterparties, including direction or magnitude, on the market
price of CONMED’s common stock or the price of the notes will
depend on a variety of factors, including market conditions, and
cannot be ascertained at this time.
The notes were offered to qualified institutional buyers
pursuant to Rule 144A under the Securities Act. The offer and sale
of the notes and the shares of common stock issuable upon
conversion of the notes, if any, have not been registered under the
Securities Act or the securities laws of any other jurisdiction,
and the notes and any such shares may not be offered or sold absent
registration or an applicable exemption from such registration
requirements.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy any securities, including the notes
or CONMED common stock, nor shall there be any sale of securities
in any state or jurisdiction in which such an offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such state or jurisdiction.
About CONMED Corporation
CONMED is a medical technology company that provides surgical
devices and equipment for minimally invasive procedures. The
Company’s products are used by surgeons and physicians in a variety
of specialties, including orthopedics, general surgery, gynecology,
neurosurgery, thoracic surgery and gastroenterology. CONMED has a
direct selling presence in 19 countries, and international sales
constitute approximately 50% of the Company’s total sales.
Headquartered in Utica, New York, the Company employs approximately
3,100 people.
Forward-Looking Statements
This press release contains forward-looking statements based on
certain assumptions and contingencies that involve risks and
uncertainties, which could cause actual results, performance, or
trends to differ materially from those expressed in the
forward-looking statements herein or in previous disclosures.
Forward-looking statements include, but are not limited to,
statements regarding CONMED’s completion of the offering, CONMED’s
anticipated use of proceeds and the Buffalo Filter Acquisition. In
addition to general industry and economic conditions, factors that
could cause actual results to differ materially from those in the
forward-looking statements may include, but are not limited to,
CONMED’s ability to meet the closing conditions required for the
consummation of the offering and the risk factors discussed in
CONMED's Annual Report on Form 10-K for the fiscal year ended
December 31, 2017 and listed under the heading Forward-Looking
Statements in CONMED’s most recently filed Form 10-Q. Any and all
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995
and relate to CONMED’s performance on a going-forward basis. CONMED
believes that all forward-looking statements made by it have a
reasonable basis, but there can be no assurance that management’s
expectations, beliefs or projections as expressed in the
forward-looking statements will actually occur or prove to be
correct.
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version on businesswire.com: https://www.businesswire.com/news/home/20190124005857/en/
CONMED CorporationTodd Garner, Chief Financial
Officer, 315-624-3317ToddGarner@conmed.com
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