LCI Industries (NYSE: LCII) (the “Company”) which, through its
wholly-owned subsidiary, Lippert Components, Inc. (“Lippert”),
supplies a broad array of highly engineered components for the
leading original equipment manufacturers (“OEMs”) in the recreation
and transportation product markets, and the related aftermarkets of
those industries, priced $400.0 million in aggregate principal
amount of 1.125% convertible senior notes due 2026 (the “notes”) in
a previously announced private placement (the “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, the Company has granted the initial
purchasers of the notes an option to purchase, within a 13-day
period from and including the date on which the notes are first
issued, up to an additional $60.0 million in aggregate principal
amount of notes.
The notes will be generally unsecured obligations of the Company
and will bear interest at a rate of 1.125% per year, payable
semi-annually in arrears on May 15 and November 15, beginning on
November 15, 2021. The notes will mature on May 15, 2026, unless
earlier converted, redeemed or repurchased in accordance with their
terms prior to such date. Prior to the close of business on the
business day immediately preceding January 15, 2026, noteholders
may convert their notes only upon the satisfaction of certain
conditions and during certain periods. On or after January 15, 2026
until the close of business on the second scheduled trading day
immediately preceding the maturity date, noteholders may convert
all or any portion of their notes at any time.
The Company will settle conversions by paying cash up to the
aggregate principal amount of the notes to be converted and paying
or delivering, as the case may be, cash, shares of its common stock
or a combination of cash and shares of its common stock, at its
election, in respect of the remainder, if any, of its conversion
obligation in excess of the aggregate principal amount of the notes
being converted, based on the then applicable conversion rate.
Noteholders will have the right to require the Company to
repurchase for cash all or any portion of their notes at 100% of
their principal amount, plus any accrued and unpaid interest, upon
the occurrence of certain fundamental changes.
The conversion rate will initially be 6.0369 shares of the
Company’s common stock per $1,000 principal amount of notes
(equivalent to an initial conversion price of approximately $165.65
per share of the Company’s common stock), subject to adjustment.
The initial conversion price of the notes represents a premium of
approximately 27.5% over the $129.92 per share closing price of the
Company’s common stock on May 10, 2021. The sale of the notes is
expected to close on May 13, 2021, subject to customary closing
conditions.
In connection with the pricing of the notes, the Company entered
into privately negotiated convertible note hedge transactions with
one or more financial institutions, including one or more of the
initial purchasers or their respective affiliates (the “option
counterparties”). These transactions cover, subject to customary
anti-dilution adjustments, the number of shares of the Company’s
common stock that will initially underlie the notes, and are
expected generally to reduce the potential equity dilution, and/or
offset any cash payments the Company is required to make in excess
of the principal amount due, as the case may be, upon conversion of
the notes.
The Company also entered into separate, privately negotiated
warrant transactions with the option counterparties at a higher
strike price relating to the same number of shares of the Company’s
common stock, subject to customary anti-dilution adjustments,
pursuant to which the Company will sell warrants to the option
counterparties. The warrants could have a dilutive effect on the
Company’s outstanding common stock and the Company’s earnings per
share to the extent that the market price per share of the
Company’s common stock exceeds the applicable strike price of those
warrants. The strike price of the warrants will initially be
$259.84 per share, which represents a premium of 100% over the per
share closing price of the Company’s common stock on May 10, 2021,
and is subject to certain adjustments under the terms of the
warrant transactions.
If the initial purchasers exercise their option to purchase
additional notes, the Company expects to enter into additional
convertible note hedge transactions and additional warrant
transactions with the option counterparties, which will initially
cover the number of shares of the Company’s common stock that will
initially underlie the additional notes sold to the initial
purchasers.
The Company estimates that the net proceeds from this offering
will be approximately $389.6 million (or approximately $448.1
million if the initial purchasers exercise their option to purchase
additional notes in full), after deducting the initial purchasers’
discount and the Company’s estimated offering expenses.
The Company intends to use a portion of the net proceeds from
the offering to fund the cost of entering into the convertible note
hedge transactions (after such cost is partially offset by the
proceeds to the Company from the sale of the warrant transactions).
The Company intends to use the remainder of the net proceeds from
the offering to repay outstanding borrowings under its revolving
credit facility and for general corporate purposes. If the initial
purchasers exercise their option to purchase additional notes, then
the Company intends to use a portion of the additional net proceeds
to fund the cost of entering into additional convertible note hedge
transactions (after such cost is partially offset by the proceeds
to the Company from the sale of the additional warrant
transactions).
The Company has been advised that in connection with
establishing their initial hedges of the convertible note hedge and
warrant transactions, the option counterparties and/or their
respective affiliates expect to enter into various derivative
transactions with respect to the Company’s common stock and/or
purchase shares of the Company’s common stock concurrently with or
shortly after the pricing of the notes. This activity could have
the effect of increasing (or reducing the size of any decrease in)
the market price of the Company’s common stock and/or the notes at
that time. The option counterparties and/or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to the Company’s common
stock and/or purchasing or selling the Company’s common stock or
other securities of the Company in secondary market transactions
following the pricing of the notes and prior to the maturity of the
notes (and the option counterparties and/or their respective
affiliates are likely to do so in connection with any conversion of
the notes or redemption or repurchase of the notes).
The potential effect, if any, of these transactions and
activities on the market price of the Company’s common stock or the
notes will depend in part on market conditions and cannot be
ascertained at this time, but any of these activities could
adversely affect the value of the Company’s common stock, which
could affect the ability of noteholders to convert the notes, the
value of the notes and the amount of cash and the number of and
value of the shares of the Company’s common stock, if any,
noteholders would receive upon conversion of the notes.
The offer and sale of the notes and the shares of the Company’s
common stock, if any, issuable upon conversion of the notes have
not been registered under the Securities Act or any state
securities laws, and the notes and such shares may not be offered
or sold absent registration or an applicable exemption from, or in
a transaction not subject to, the registration requirements of the
Securities Act and applicable state laws.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification thereof under the
securities laws of such jurisdiction. Any offers of the notes will
be made only by means of a private offering memorandum. The notes
being offered have not been approved or disapproved by any
regulatory authority, nor has any such authority passed upon the
accuracy or adequacy of the applicable private offering
memorandum.
About LCI Industries
LCI Industries, through its wholly-owned subsidiary, Lippert,
supplies, domestically and internationally, a broad array of highly
engineered components for the leading OEMs in the recreation and
transportation product markets, consisting primarily of
recreational vehicles and adjacent industries, including buses;
trailers used to haul boats, livestock, equipment, and other cargo;
trucks; boats; trains; manufactured homes; and modular housing. The
Company also supplies engineered components to the related
aftermarkets of these industries, primarily by selling to retail
dealers, wholesale distributors, and service centers. Lippert's
products include steel chassis and related components; axles and
suspension solutions; slide-out mechanisms and solutions;
thermoformed bath, kitchen, and other products; vinyl, aluminum,
and frameless windows; manual, electric, and hydraulic stabilizer
and leveling systems; entry, luggage, patio, and ramp doors;
furniture and mattresses; electric and manual entry steps; awnings
and awning accessories; towing products; truck accessories;
electronic components; and other accessories.
Forward-Looking Statements
This press release contains “forward-looking statements” that
involve risks and uncertainties, including statements concerning
the completion, timing and size of the offering of the notes and
the convertible note hedge and warrant transactions and the
anticipated use of proceeds from the offering. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual events to differ materially from the
Company’s plans. These risks include, but are not limited to,
market risks, trends and conditions, and those risks included in
the section titled “Risk Factors” in the Company’s Securities and
Exchange Commission (“SEC”) filings and reports, including its
Annual Report on Form 10-K for the year ended December 31, 2020,
its Quarterly Report on Form 10-Q for the quarter ended March 31,
2021 and other filings that the Company makes from time to time
with the SEC, which are available on the SEC’s website at
www.sec.gov. All forward-looking statements contained in this press
release speak only as of the date on which they were made. The
Company undertakes no obligation to update such statements to
reflect events that occur or circumstances that exist after the
date on which they were made.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210510006055/en/
Contact: Brian M. Hall, CFO Phone: (574) 535-1125
E Mail: LCII@lci1.com
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