SonoSite Prices $200 Million of Convertible Senior Notes
July 10 2007 - 9:47PM
Business Wire
SonoSite, Inc., (Nasdaq:SONO) the world leader in hand-carried
ultrasound, today announced the pricing of $200 million aggregate
principal amount of Convertible Senior Notes due 2014 in an
offering registered under the Securities Act of 1933 as amended
(the �Securities Act�), which represents an increase of $50 million
from the amount previously announced. The notes will pay interest
semiannually at a rate of 3.75% per annum. In certain
circumstances, the notes will be convertible based on an initial
conversion rate of 26.1792 shares of common stock per $1,000
principal amount of notes, which is equivalent to an initial
conversion price of approximately $38.20 per share. Conversions
will be settled in cash up to the principal amount of the notes,
with any conversion value above the principal amount settled in
shares of SonoSite's common stock. Holders of the notes may require
SonoSite to repurchase the notes for cash equal to 100% of the
principal amount to be repurchased plus accrued and unpaid interest
upon the occurrence of a fundamental change. SonoSite has granted
the underwriters a 30-day option to purchase up to $25 million in
aggregate principal amount of additional notes to cover
overallotments. SonoSite intends to use the net proceeds from this
offering (remaining after the cost of the convertible note hedge
and warrant transactions described below) to fund acquisitions from
time to time of one or more complementary businesses or product
lines. To the extent the net proceeds are not used for
acquisitions, they will be used for general corporate purposes,
which may include repayment of debt, capital expenditures,
investments in its subsidiaries or as additions to working capital.
Net proceeds may be temporarily invested prior to use. In
connection with the offering, SonoSite expects to use a portion of
the proceeds of the offering to enter into a convertible note hedge
transaction with an affiliate of one of the underwriters (the
"Option Counterparty"), which will cover approximately 48%
(assuming no overallotment) of any notes converted, and will be
intended to reduce the potential dilution to SonoSite's common
stockholders upon any such conversion by effectively increasing the
conversion price for these notes to approximately $46.97 per share
of SonoSite�s common stock, representing a 50% premium relative to
the last reported sale price on July 10, 2007 of $31.31 per share.
The company also expects to enter into a warrant transaction with
the Option Counterparty concurrently with the convertible note
hedge transaction. The cost of the convertible note hedge
transaction will be partially offset by proceeds that will be
received from the warrant transaction. In connection with
establishing its initial hedge of these transactions, the Option
Counterparty or its affiliates expect to enter into various
derivative transactions with respect to SonoSite's common stock
concurrently with or shortly after the pricing of the notes, and
may enter into or unwind various derivative transactions with
respect to SonoSite's common stock and/or purchase or sell
SonoSite's common stock in secondary market transactions following
the pricing of the notes (and are likely to do so during any
observation period related to a conversion of notes). These
activities could have the effect of increasing or preventing a
decline in the price of SonoSite's common stock concurrently with
or shortly after the pricing of the notes. In addition, the Option
Counterparty or its affiliates may modify its hedge position
following the pricing of the notes from time to time by entering
into or unwinding various derivative transactions and/or by
purchasing or selling SonoSite's common stock in secondary market
transactions. These activities could adversely affect the price of
SonoSite's common stock and the value of the notes and, as a
result, the settlement amount payable upon conversion of the notes.
JPMorgan is the sole book running manager for the offering and
Piper Jaffray and Savvian are serving as co-managers for the
offering. This press release is neither an offer to sell or a
solicitation of an offer to buy the notes nor shall there be any
sale of the notes in any state or jurisdiction in which such an
offer, solicitation or sale would be unlawful prior to the
registration or qualification thereof under the securities laws of
any such state or jurisdiction. About SonoSite SonoSite, Inc.
(www.sonosite.com) is the innovator and world leader in
hand-carried ultrasound. Headquartered near Seattle, the company is
represented by eight subsidiaries and a global distribution network
in over 90 countries. SonoSite�s small, lightweight systems are
expanding the use of ultrasound across the clinical spectrum by
cost-effectively bringing high performance ultrasound to the point
of patient care. The company employs over 550 people worldwide.
Forward-Looking Information and the Private Litigation Reform Act
of 1995 Certain statements in this press release relating to our
proposed convertible note financing, possible hedging transactions
we may enter into in connection our proposed convertible note
financing, our expected use of proceeds from the proposed financing
and our acquisition strategy are 'forward-looking statements' for
the purposes of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are based on the opinions and estimates of our
management at the time the statements are made and are subject to
risks and uncertainties that could cause actual results to differ
materially from those expected or implied by the forward-looking
statements. These statements are not guaranties of future
performance and are subject to known and unknown risks and
uncertainties and are based on potentially inaccurate assumptions.
Factors that could affect actual results include the risk that we
are unable to complete the proposed convertible note financing on
the terms described in this release, if at all, the risk that we do
not enter into the possible hedging transaction described in this
release, resulting in additional dilution from our convertible debt
offering, the risk that the proposed hedging transaction described
in this release has an adverse effect on the trading price of our
common stock and the risk that we are unable to successfully
execute our acquisition strategy, as well as other factors
contained in the Item 1A. 'Risk Factors' section of our Annual
Report on Form 10-K for the year ended December 31, 2006 filed with
the Securities and Exchange Commission. We caution readers not to
place undue reliance upon these forward-looking statements that
speak only as to the date of this release. We undertake no
obligation to publicly revise any forward-looking statements to
reflect new information, events or circumstances after the date of
this release or to reflect the occurrence of unanticipated events.
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