By Stephanie N. Rotondo
Seattle, Aug. 8 – K2M Group Holdings Inc. priced $50 million of 4.125% 20-year convertible senior notes at par to with a 30% initial conversion premium on Monday, the company said in a press release.
Prior to Feb. 15, 2036, the notes are convertible only upon certain circumstances and during certain periods. After that date, the notes are convertible at any time.
The Rule 144A notes are convertible into common stock at an initial conversion rate of 45.7603 shares per each $1,000 of notes. That equates to an initial conversion price of $21.85 per share, a 30% conversion premium over the Aug. 5 closing share price of $16.81.
Additionally, the notes are convertible upon certain corporate transactions that occur before Aug. 15, 2021.
The company can choose to satisfy any conversion through the issuance of stock, cash or a combination thereof. In certain circumstances, the conversion rate can be increased, at the company’s option.
Interest will be payable on a semiannual basis. Holders can put the notes back to the company on Aug. 15, 2021, 2026 and 2031 at par plus accrued interest. The company can meantime opt to redeem the notes on or after Aug. 15, 2021.
Proceeds will be used to repay $19.5 million of borrowings under a revolving credit facility. Any remaining funds will be used for general corporate purposes, including working capital and purchasing inventory.
K2M is a Leesburg, Va.-based global medical device company.
| Issuer: | K2M Group Holdings Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $50 million
|
| Maturity: | Aug. 15, 2036
|
| Coupon: | 4.125%
|
| Price: | Par of $1,000
|
| Yield: | 4.125%
|
| Call options: | On or after Aug. 15, 2021 at par plus accrued interest
|
| Put options: | On Aug. 15, 2021, 2026, or 2031 at par plus accrued interest
|
| Conversion premium: | 30%
|
| Conversion price: | $21.85 per share
|
| Conversion rate: | 45.7603 shares
|
| Pricing date: | Aug. 8
|
| Settlement date: | Aug. 11
|
| Distribution: | Rule 144A
|
| Stock symbol: | Nasdaq: KTWO
|
| Stock price: | $16.81 as of Aug. 5 close
|
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