Evolent exchanges $84.2 million of 2% convertibles for new notes

By Rebecca Melvin

New York, Aug. 14 – Evolent Health Inc. has entered into exchange and subscription agreements with some holders of its 2% convertible senior notes due 2021 and new investors, according to a news release on Friday.

Under the exchange transactions, the company will exchange $84.2 million of 2% convertibles for new 3.5% convertible notes due 2024 and an aggregate cash payment of $2.5 million. Under the subscription transactions, it is issuing $32.8 million of new notes for cash at par.

The exchange and subscription transactions are expected to close on Aug. 19.

Evolent will not receive cash proceeds from the exchanges and estimates that it will receive about $27.4 million of proceeds from the subscription transactions, after deducting transaction expenses and cash paid to participants in connection with the exchange transactions.

A portion of the proceeds from the new notes will be used to repurchase a portion of the outstanding notes for cash, with remaining proceeds for general corporate purposes.

Concurrently with the exchange and subscription transactions, the company has executed agreements with holders of 2021 notes to repurchase an aggregate $14 principal amount of 2021 notes following the exchange and subscription transactions.

The new notes mature Dec. 1, 2024 and are convertible into cash, shares or a combination of cash and shares, based on an initial conversion rate of 54.8667 shares of common stock per note, which is the equivalent of an initial conversion price of about $18.23 per share, or 30% over the closing share price on Thursday.

The notes have a fundamental change put at par plus accrued and unpaid interest. They are non-callable for three years, until March 1, 2023 and then provisionally callable if the price of shares is at least 130% over the conversion price for at least 20 out of 30 trading days.

Evolent Health is an Arlington, Va.-based provider of a care platform for health systems and physicians organizations.

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