By Abigail W. Adams
Portland, Me., Feb. 5 – SmileDirectClub Inc. priced an upsized $650 million of five-year convertible notes after the market close on Thursday at par with a coupon of 0% and an initial conversion premium of 40%, according to a company news release.
Pricing came in line with tightened talk for a fixed coupon of 0% and at the rich end of talk for an initial conversion premium of 35% to 40%, according to a market source.
Initial price talk was for a coupon of 0% to 0.5% and an initial conversion premium of 30% to 35%, according to a market source.
J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are joint bookrunners for the Rule 144A offering, which carries an upsized greenshoe of $97.5 million.
The initial size of the offering was $350 million with a greenshoe was $52.5 million.
The notes are non-callable until Feb. 6, 2024 and then subject to a 130% hurdle.
There is takeover and dividend protection.
The notes will be settled in cash, shares or a combination of both at the company’s option.
In connection with the offering, the company entered into capped call transactions with a cap price of $25.80, which represents a premium of 100% over the last reported sales price of stock.
Net proceeds are expected to be $630 million or will be $725 million if the greenshoe is exercised in full.
Approximately $60 million of net proceeds will be used to cover the call spread with the remaining amount to be used for general corporate purposes, which may include repaying outstanding amounts under its credit facilities.
SmileDirectClub is a Nashville, Tenn.-based oral care company.
| Issuer: | SmileDirectClub Inc.
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| Securities: | Convertible senior notes
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| Amount: | $650 million
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| Greenshoe: | $97.5 million
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| Maturity: | Feb. 1, 2026
|
| Bookrunners: | J.P. Morgan Securities LLC and Citigroup Global Markets Inc.
|
| Coupon: | 0%
|
| Price: | Par
|
| Yield: | 0%
|
| Conversion premium: | 40%
|
| Conversion price: | $18.06
|
| Conversion rate: | 55.3710
|
| Call options: | Non-callable until Feb. 6, 2024 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
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| Pricing date: | Feb. 4
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| Settlement date: | Feb. 9
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| Distribution: | Rule 144A
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| Talk: | Revised talk for fixed coupon of 0% and initial conversion premium of 35% to 40%; initial price talk was for coupon of 0% to 0.5% and initial conversion premium of 30% to 35%
|
| Stock symbol: | Nasdaq: SDC
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| Stock price: | $12.90 at market close Feb. 4
|
| Market capitalization: | $4.98 billion
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