By Abigail W. Adams
Portland, Me., June 5 – Varex Imaging Corp. priced an upsized $175 million of five-year convertible notes after the market close on Thursday at par at the cheap end of talk with a coupon of 4% and an initial conversion premium of 25%, according to a company news release.
Price talk was for a coupon of 3.5% to 4% and an initial conversion premium of 25% to 30%, according to a market source.
Goldman Sachs & Co. LLC, BofA Securities Inc. and Wells Fargo Securities LLC were the bookrunners for the Rule 144A offering, which carries an upsized greenshoe of $25 million.
The initial size of the deal was $150 million with a greenshoe of $22.5 million.
The notes are contingently convertible until Dec. 1, 2024.
They are non-callable until June 1, 2023 and then subject to a 130% hurdle.
The notes are putable upon a fundamental change. There is dividend protection.
The notes will be settled in cash, shares or a combination of both at the company’s option.
In connection with the pricing of the notes, the company entered into convertible note hedge and warrant transactions with the strike price on the warrant transactions representing a 50% premium over the last reported sales price of stock.
Net proceeds are expected to be $169 million or will be $193.3 million if the greenshoe is exercised in full.
Proceeds will be used to cover the cost of the hedge transactions, $75 million will be used to partially repay debt under its credit agreement, with the remaining amount to be used for general corporate purposes.
Varex Imaging is a Salt Lake City-based designer and manufacturer of X-ray imaging components.
| Issuer: | Varex Imaging Corp.
|
| Securities: | Convertible senior notes
|
| Amount: | $175 million
|
| Greenshoe: | $25 million
|
| Maturity: | June 1, 2025
|
| Bookrunners: | Goldman Sachs & Co. LLC, BofA Securities Inc. and Wells Fargo Securities LLC
|
| Coupon: | 4%
|
| Price: | Par
|
| Yield: | 4%
|
| Conversion premium: | 25%
|
| Conversion price: | $20.81
|
| Conversion rate: | 48.048
|
| Call options: | Non-callable until June 1, 2023 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
|
| Pricing date: | June 4
|
| Settlement date: | June 9
|
| Distribution: | Rule 144A
|
| Talk: | Coupon of 3.5% to 4% and initial conversion premium of 25% to 30%
|
| Stock symbol: | Nasdaq: VREX
|
| Stock price: | $16.65 at market close June 5
|
| Market capitalization: | $651 million
|
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