K2M group talks $65 million seven-year convertible notes to yield 2.625% to 3.125%, up 20% to 25%

By Abigail W. Adams

Portland, Me., June 13 – K2M Group Holdings, Inc. plans to price $65 million in seven-year convertible notes prior to the market open on Thursday with price talk for a coupon of 2.625% to 3.125% and an initial conversion premium of 20% to 25%, according to a market source.

J.P. Morgan Securities LLC is bookrunner for the Rule 144A deal, which carries a greenshoe of $10 million.

The notes are non-callable for three years and may then be redeemed subject to a 130% hurdle with a make-whole. There is dividend and takeover protection.

Conversions will be settled in cash, shares or a combination of both at the company’s option.

Proceeds will be used to pay down approximately $18 million of the company’s existing ABL credit facility and for general corporate purposes, according to a company news release.

K2M Group Holdings is a Leesburg, Va.-based medical device company focused on the design, development and commercialization of minimally invasive technologies to treat spinal pathologies.

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