By Rebecca Melvin
New York, Feb. 10 – Wright Medical Group Inc. priced an upsized $550 million of five-year convertible senior notes at par to yield 2% with an initial conversion premium of 22.5%, according to a release.
The Rule 144A was initially talked at $400 million in size. There is a greenshoe for up to $82.5 million additional notes, which was upsized from $60 million.
Pricing of the notes came at the rich end of talk, which was for a 2% to 2.5% coupon and 17.5% to 22.5% premium.
Joint bookrunners were J.P. Morgan Securities LLC and Wells Fargo Securities LLC.
The notes are subject to modification upon completion of the company’s pending merger with Tornier NV. After the merger, the company will be known as Wright Medical Group NV, and this company will fully guarantee obligations under the notes’ indenture.
The notes are non-callable with no puts, except a takeover put. There is dividend protection for any dividend paid.
There is also contingent conversion if the company’s shares trade above 130% of the initial conversion price.
In connection with the pricing of the notes, the company entered into convertible note hedge and warrant transactions, or a call spread. The strike on the warrants is $40 per share, which boosts the initial conversion premium from the company’s perspective to 57%.
About $292 million of proceeds will be used to repurchase about $240 million face value of the company’s outstanding 2% convertibles due 2017. Proceeds will also be used for general corporate purposes, including possible acquisitions, and about $51 million will be used to pay the net cost of the call spread.
Wright Medical is an Arlington, Tenn.-based orthopedic medical device company.
| Issuer: | Wright Medical Group Inc.
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| Issue: | Convertible senior notes
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| Amount: | $550 million, upsized from $400 million
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| Greenshoe: | $82.5 million, upsized from $60 million
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| Maturity: | Feb. 15, 2020
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| Bookrunners: | J.P. Morgan Securities LLC and Wells Fargo Securities LLC
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| Coupon: | 2%
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| Price: | Par
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| Yield: | 2%
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| Conversion premium: | 22.5%
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| Conversion price: | $30.87
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| Initial conversion ratio: | 32.3939 shares
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| Calls: | Non-callable
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| Puta: | No puts
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| Contingent conversion: | Yes, at 130%
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| Takeover protection: | Yes
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| Dividend protection: | Yes
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| Call spread: | Yes, $40 strike on the warrants boosts the premium to 57% from the company’s perspective
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| Price talk: | 2%-2.5%, up 17.5%-22.5%
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| Pricing date: | Feb. 9
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| Settlement date: | Feb. 13
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| Distribution: | Rule 144A
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| Stock symbol: | Nasdaq: WMGI
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| Stock reference price: | $25.20 as of close Feb. 9
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| Market capitalization: | $1.26 billion
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