Alphatec Holdings, Inc. (Nasdaq: ATEC) today announced its
intention to offer, subject to market and other conditions,
$250,000,000 aggregate principal amount of convertible senior notes
due 2026 (the “notes”) in a private offering to qualified
institutional buyers pursuant to Rule 144A under the Securities Act
of 1933, as amended (the “Securities Act”). Alphatec also expects
to grant the initial purchasers of the notes an option to purchase,
for settlement within a period of 13 days from, and including, the
date the notes are first issued, up to an additional $37,500,000
principal amount of notes.
The notes will be senior, unsecured obligations of Alphatec,
will accrue interest payable semi-annually in arrears and will
mature on August 1, 2026, unless earlier repurchased, redeemed or
converted. Before February 2, 2026, noteholders will have the right
to convert their notes only upon the occurrence of certain events.
From and after February 2, 2026, noteholders may convert their
notes at any time at their election until the close of business on
the second scheduled trading day immediately before the maturity
date. Alphatec will settle conversions by paying or delivering, as
applicable, cash, shares of its common stock or a combination of
cash and shares of its common stock, at Alphatec’s election. The
notes will be redeemable, in whole or in part, for cash at
Alphatec’s option at any time, and from time to time, on or after
August 6, 2024 and on or before the 40th scheduled trading day
immediately before the maturity date, but only if the last reported
sale price per share of Alphatec’s common stock exceeds 130% of the
conversion price for a specified period of time. The redemption
price will be equal to the principal amount of the notes to be
redeemed, plus accrued and unpaid interest, if any, to, but
excluding, the redemption date. If certain events that constitute a
“fundamental change” occur, then, subject to a limited exception,
noteholders may require Alphatec to repurchase their notes at a
cash repurchase price equal to the principal amount of the notes to
be repurchased, plus accrued and unpaid interest, if any, to, but
excluding, the applicable repurchase date. The final terms of the
notes, including the interest rate, initial conversion rate and
certain other terms of the notes, will be determined at the pricing
of the offering.
In connection with the pricing of the notes, Alphatec expects to
enter into one or more privately negotiated capped call
transactions with one or more of the initial purchasers of the
notes and/or their respective affiliates and/or other financial
institutions (in this capacity, the “option counterparties”). The
capped call transactions are expected generally to reduce the
potential dilution to Alphatec’s common stock upon any conversion
of the notes and/or offset any cash payments Alphatec is required
to make in excess of the principal amount of the converted notes,
as the case may be, with such reduction and/or offset subject to a
cap. If the initial purchasers of the notes exercise their option
to purchase additional notes, Alphatec expects to enter into
additional capped call transactions with the option
counterparties.
Alphatec has been advised that, in connection with establishing
their initial hedges of the capped call transactions, the option
counterparties or their respective affiliates expect to enter into
various derivative transactions with respect to Alphatec’s common
stock and/or purchase shares of Alphatec’s common stock
concurrently with or shortly after the pricing of the notes. This
activity could increase (or reduce the size of any decrease in) the
market price of Alphatec’s common stock or the notes at that
time.
In addition, the option counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to Alphatec’s common
stock and/or purchasing or selling shares of Alphatec’s common
stock or other of Alphatec’s securities in secondary market
transactions following the pricing of the notes and from time to
time prior to the maturity of the notes (and are likely to do so
following any conversion of the notes, any repurchase of the notes
by Alphatec on any fundamental change repurchase date, any
redemption date or any other date on which the notes are retired by
Alphatec, in each case if Alphatec exercises the relevant election
under the capped call transactions where such termination is at
Alphatec’s option). This activity could also cause or avoid an
increase or a decrease in the market price of Alphatec’s common
stock or the notes, which could affect the ability of holders of
the notes to convert the notes and, to the extent the activity
occurs during any observation period related to a conversion of
notes, it could affect the number of shares of Alphatec’s common
stock, if any, and value of the consideration that holders of notes
will receive upon conversion of such notes.
Alphatec intends to use a portion of the net proceeds from the
offering to fund the cost of entering into the capped call
transactions. Alphatec expects to use up to $25.0 million of the
net proceeds from the offering to repurchase shares of its common
stock from certain purchasers of notes in privately negotiated
transactions effected through one of the initial purchasers of the
notes or its affiliate, as Alphatec’s agent, concurrently with the
note offering (such transactions, the “share repurchases”).
Alphatec intends to use approximately $45.2 million of the net
proceeds to repay all of the outstanding balance under, and
terminate, its term loan, including accrued and unpaid interest,
approximately $8.2 million of the net proceeds to repay the
outstanding balance under, and terminate, its subsidiary’s
inventory financing agreement, including accrued and unpaid
interest, and the remaining net proceeds for general corporate
purposes. If the initial purchasers exercise their option to
purchase additional notes, then Alphatec intends to use a portion
of the additional net proceeds to fund the cost of entering into
additional capped call transactions.
The share repurchases may increase, or reduce the size of a
decrease in, the trading price of Alphatec common stock prior to,
concurrently with or shortly after the pricing of the notes, and
may affect the initial terms of the notes, including the initial
conversion price.
The notes will be offered only to persons reasonably believed to
be qualified institutional buyers pursuant to Rule 144A under the
Securities Act. The offer and sale of the notes and any shares of
common stock issuable upon conversion of the notes have not been,
and will not be, registered under the Securities Act or any other
securities laws, and the notes and any such shares cannot be
offered or sold except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and any other applicable securities laws. This press
release does not constitute an offer to sell, or the solicitation
of an offer to buy, the notes or any shares of common stock
issuable upon conversion of the notes, nor will there be any sale
of the notes or any such shares, in any state or other jurisdiction
in which such offer, sale or solicitation would be unlawful.
About Alphatec Holdings, Inc.
Alphatec, through its wholly owned subsidiaries, Alphatec Spine,
Inc., EOS imaging S.A. and SafeOp Surgical, Inc., is a medical
device company dedicated to revolutionizing the approach to spine
surgery through clinical distinction. Alphatec’s Organic Innovation
MachineTM is focused on developing new approaches that integrate
seamlessly with the Company’s expanding AlphaInformatiX Platform to
better inform surgery and more safely and reproducibly achieve the
goals of spine surgery. Alphatec’s vision is to become the Standard
Bearer in Spine.
Special Note on Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements regarding the anticipated terms of
the notes being offered, the completion, timing and size of the
proposed offering, the intended use of the net proceeds, the
anticipated terms of, and the effects of entering into, the capped
call transactions described above and the actions of the option
counterparties and their respective affiliates and the anticipated
terms of, and the effects of entering into, the share repurchases
described above. These statements reflect Alphatec’s current
beliefs and are based upon information currently available to it.
Accordingly, such forward-looking statements involve known and
unknown risks, uncertainties and other factors which could cause
Alphatec’s actual results, performance or achievements to differ
materially from those expressed in, or implied by, such statements.
These risks, uncertainties, factors and contingencies include, but
are not limited to: market conditions, including market interest
rates, the trading price and volatility of Alphatec’s common stock
and risks relating to Alphatec’s business, including those
described in periodic reports that Alphatec files from time to time
with the SEC. Alphatec may not consummate the proposed offering
described in this press release and, if the proposed offering is
consummated, cannot provide any assurances regarding the final
terms of the offer or the notes or its ability to effectively apply
the net proceeds as described above. All information in this
release is as of the date hereof, and Alphatec undertakes no
obligation to update any forward-looking statement to conform the
statement to actual results or changes in Alphatec’s expectations,
except as may be required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210804006113/en/
Investor/Media Contact: Tina Jacobsen, CFA Investor
Relations (760) 494-6790 investorrelations@atecspine.com
Company Contact: J. Todd Koning Chief Financial Officer
Alphatec Holdings, Inc. investorrelations@atecspine.com
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