ARLINGTON, Tenn.--(BUSINESS WIRE)--Wright Medical Group, Inc. (NASDAQ: WMGI) (the “Company”) today announced its intention to commence an offering (the “Offering”), subject to market and other conditions, of $200,000,000 million principal amount of its Cash Convertible Senior Notes due 2017 (the “Notes”), to be offered and sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Company intends to grant the initial purchasers of the Notes an option to purchase up to an additional $30,000,000 million principal amount of Notes to cover over-allotments. The Notes will 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 Company intends to enter into one or more privately negotiated convertible note hedge transactions with certain financial institutions (the “Option Counterparties”) to reduce its exposure under the Notes to future increases in the price of its common stock (and, one or more additional convertible note hedge transactions, if the initial purchasers exercise their over-allotment option). The Company also intends to enter into separate privately negotiated warrant transactions with the Option Counterparties (and, one or more additional warrant transactions, if the initial purchasers exercise their over-allotment option) and anticipates that the warrants will have an exercise price that is significantly higher than the closing price of the Company’s common stock on the date the warrants are issued. The issuance of the warrants could have a dilutive effect on the Company’s common stock to the extent that the market price of the Company’s common stock exceeds the exercise price of the warrants.
The Company intends to use approximately $130 million of net proceeds to pay the outstanding term loan under its senior credit facility and a portion of the net proceeds to fund the cost of the convertible note hedge transactions. The balance of the net proceeds will be used to fund up to $30 million of repurchases we are able to make of our convertible senior notes due 2014 and for general corporate purposes, including possible acquisitions.
In connection with the convertible note hedge transactions and the separate warrant transactions, the Option Counterparties have advised the Company that they expect to enter into various derivative transactions with respect to the Company’s common stock, and may purchase and sell the Company’s common stock or other securities in secondary market transactions, concurrently with or shortly after the pricing of the Notes. These hedging activities could initially increase, decrease or maintain the market price of the Company’s common stock and could subsequently otherwise affect the market price of the Company’s common stock.
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.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities, in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements. These statements are based on current expectations or beliefs and are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including without limitation, whether or not the Company will offer the Notes or consummate the Offering, enter into the convertible note hedge transactions or the separate warrant transactions, the anticipated terms of the Notes and the Offering, and the anticipated use of the proceeds of the Offering. 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.