By Abigail W. Adams
Portland, Me., June 14 – K2M Group Holdings, Inc. priced $65 million of seven-year convertible notes prior to the market open on Thursday with a coupon of 3% and an initial conversion premium of 22.5%, according to a company news release.
Pricing came towards the cheap end of talk for a coupon of 2.625% to 3.125% and at the midpoint of talk for 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 then may be redeemed subject to a 130% hurdle with a make-whole. There is dividend and takeover protection.
They are contingently convertible until March 30, 2025.
Conversions will be settled in cash, shares or a combination of both at the company’s option.
Net proceeds are expected to be $61.8 million or $71.4 million if the greenshoe is exercised in full.
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.
| Issuer: | K2M Group Holdings Inc.
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| Securities: | Convertible senior notes
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| Amount: | $65 million
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| Greenshoe: | $10 million
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| Maturity: | June 30, 2025
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| Bookrunners: | J.P. Morgan Securities LLC
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| Coupon: | 3%
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| Price: | Par
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| Conversion premium: | 22.5%
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| Conversion price: | $28.33
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| Conversion rate: | 35.2930
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| Call options: | Non-callable for three years, then subject to a 130% hurdle
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| Put options: | None
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| Pricing date: | June 14
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| Settlement date: | June 18
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| Talk: | Coupon of 2.625% to 3.125% and an initial conversion premium of 20% to 25%
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| Stock symbol: | Nasdaq: KTWO
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| Stock price: | $23.13 at market close June 13
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| Market capitalization: | $917.11 million
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