Merit Medical Systems, Inc. (Nasdaq: MMSI) (“Merit”), a
leading global manufacturer and marketer of healthcare technology,
announced the pricing of $650.0 million aggregate principal amount
of 3.00% Convertible Senior Notes due 2029 (the “notes”) in a
private placement (the “offering”) only to persons reasonably
believed to be “qualified institutional buyers” pursuant to Rule
144A under the Securities Act of 1933, as amended (the “Securities
Act”). Merit has granted the initial purchasers of the notes an
option to purchase, during a 13-day period beginning on, and
including, the date on which the notes are first issued, up to an
additional $97.5 million aggregate principal amount of the notes on
the same terms and conditions. The offering was upsized from the
previously announced offering of $550 million aggregate principal
amount of notes. The sale of the notes to the initial purchasers is
expected to close on December 8, 2023, subject to customary closing
conditions.
The notes will bear interest at 3.00% per year,
payable semi-annually in arrears on February 1 and August 1 of each
year, beginning on August 1, 2024. The notes will mature on
February 1, 2029, unless earlier repurchased, redeemed or converted
in accordance with their terms prior to such date. When issued, the
notes will be Merit’s senior unsecured obligations and will rank
senior in right of payment to any of Merit’s indebtedness that is
expressly subordinated in right of payment to the notes; equal in
right of payment to any of Merit’s unsecured indebtedness that is
not so subordinated; effectively junior in right of payment to any
of Merit’s senior, secured indebtedness (including indebtedness
under Merit’s Fourth Amended and Restated Credit Agreement) to the
extent of the value of the assets securing such indebtedness; and
structurally junior to all indebtedness and other liabilities
(including trade payables) of Merit’s subsidiaries.
Holders of the notes will have the right to
require Merit to repurchase all or a part of their notes upon the
occurrence of a “fundamental change” in cash at a fundamental
change repurchase price of 100% of their principal amount plus
accrued and unpaid interest to, but excluding, the fundamental
change repurchase date. Following certain corporate events or if
Merit calls the notes for redemption, Merit will, under certain
circumstances, increase the conversion rate for holders who elect
to convert their notes in connection with such corporate event or
convert their notes called for redemption, as the case may be.
The initial conversion rate of the notes will be
11.5171 shares of Merit’s common stock per $1,000 principal amount
of notes (equivalent to an initial conversion price of
approximately $86.83 per share of Merit’s common stock). The
initial conversion price of the notes represents a premium of
approximately 32.5% over the last reported sale price of Merit’s
common stock on the Nasdaq Global Select Market on December 5,
2023. Prior to the close of business on the business day
immediately preceding October 1, 2028, the notes will be
convertible at the option of the holders of the notes only upon the
satisfaction of specified conditions and during certain periods. On
or after October 1, 2028, until the close of business on the second
scheduled trading day immediately preceding the maturity date,
holders may convert all or any portion of their notes at any time,
regardless of such conditions. Upon conversion of the notes, Merit
will pay cash up to the aggregate principal amount of the notes to
be converted and pay or deliver, as the case may be, cash, shares
of Merit common stock or a combination of cash and shares of Merit
common stock, at Merit’s election, in respect of the remainder, if
any, of Merit’s conversion obligation in excess of the aggregate
principal amount of the notes being converted.
In connection with the pricing of the notes,
Merit entered into privately negotiated capped call transactions
with one or more of the initial purchasers and/or their respective
affiliates and certain other financial institutions (the “option
counterparties”). The capped call transactions are generally
expected to mitigate potential dilution to Merit’s common stock
upon conversion of any notes and/or offset any cash payments Merit
is required to make in excess of the principal amount of converted
notes, as the case may be, with such reduction and/or offset
subject to a cap. If the initial purchasers exercise their option
to purchase additional notes, Merit expects to enter into
additional capped call transactions with the option counterparties.
The cap price of the capped call transactions will initially be
approximately $114.68 per share of Merit’s common stock, subject to
certain adjustments under the terms of the capped call
transactions.
In connection with establishing their initial
hedges of the capped call transactions, Merit expects the option
counterparties or their respective affiliates to enter into various
derivative transactions with respect to Merit’s common stock and/or
purchase shares of Merit’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 Merit’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 Merit’s
common stock and/or purchasing or selling Merit’s common stock or
other securities of Merit in secondary market transactions
following the pricing of the notes and prior to the maturity of the
notes (and are likely to do so on each exercise date for the capped
call transactions or following any termination of any portion of
the capped call transactions in connection with any repurchase,
redemption or early conversion of the notes). This activity could
also cause or avoid an increase or a decrease in the market price
of Merit’s common stock or the notes, which could affect the
ability of a holder of notes to convert the notes and, to the
extent the activity occurs following a conversion or during any
observation period related to a conversion of notes, it could
affect the amount and value of the consideration that a holder of
notes will receive upon conversion of its notes.
Merit estimates that the net proceeds from the
offering will be $630.5 million (or approximately $725.1 million if
the initial purchasers exercise their option to purchase additional
notes in full), after deducting initial purchasers’ discounts and
commissions but before estimated offering expenses payable by
Merit. Merit intends to use approximately $57.9 million of the net
proceeds from the offering to pay the cost of the capped call
transactions. If the initial purchasers exercise their option to
purchase additional notes, Merit expects to use a portion of the
net proceeds from the sale of the additional notes to enter into
additional capped call transactions with the option counterparties.
Merit intends to use the remaining net proceeds from the offering
for general corporate purposes, which may include repayment or
reduction of existing debt, sales and marketing activities, medical
affairs and educational efforts, research and development, clinical
studies, working capital, capital expenditures and investments in
and acquisitions of other companies, products or technologies in
the future. However, while Merit regularly evaluates acquisition
opportunities, Merit has no commitments with respect to any
acquisitions of other companies, products or technologies of a
material nature at this time. The notes and any
shares of Merit’s common stock issuable upon conversion of the
notes have not been and will not be registered under the Securities
Act, any state securities laws or the securities laws of any other
jurisdiction, and unless so registered, may not be offered or sold
in the United States absent registration or an applicable exemption
from, or in a transaction not subject to, the registration
requirements of the Securities Act and other applicable securities
laws. The notes will be offered to persons reasonably believed to
be qualified institutional buyers pursuant to Rule 144A under the
Securities Act.
This press release is neither an offer to sell
nor a solicitation of an offer to buy any of these securities
(including the shares of Merit’s common stock, if any, into which
the notes are convertible) nor shall there be any sale of these
securities in any state or jurisdiction in which such an offer,
solicitation or sale would be unlawful prior to the registration or
qualification thereof under the securities laws of any such state
or jurisdiction.
About Merit Medical
Merit Medical Systems, Inc. is a leading
manufacturer and marketer of proprietary medical devices used in
interventional, diagnostic and therapeutic procedures, particularly
in cardiology, radiology, oncology, critical care and endoscopy.
Merit strives to be the most customer-focused company in
healthcare. Merit is determined to make a difference by
understanding its customers’ needs and innovating and delivering a
diverse range of products that improve the lives of people and
communities throughout the world. Merit believes that long-term
value is created for its customers, employees, shareholders, and
communities when it focuses outward and is determined to deliver an
exceptional customer experience.
Forward-Looking Statements
This release includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). All statements in this
release, other than statements of historical fact, are
“forward-looking statements” for purposes of these provisions,
including any projections of earnings, revenues or other financial
items, any statements of the plans and objectives of Merit’s
management for future operations, any statements regarding the
terms, conditions and anticipated financial transactions and
outcomes associated with the notes, any statements concerning
proposed new products or services, any statements regarding the
integration, development or commercialization of the business or
any assets acquired from other parties, any statements regarding
future economic conditions or performance, and any statements of
assumptions underlying any of the foregoing. In some cases,
forward-looking statements can be identified by the use of
terminology such as “may,” “will,” “expects,” “plans,”
“anticipates,” “intends,” “seeks,” “believes,” “estimates,”
“potential,” “forecasts,” “continue,” or other forms of these words
or similar words or expressions, or the negative thereof or other
comparable terminology. Although Merit believes that the
expectations reflected in the forward-looking statements contained
herein are reasonable, there can be no assurance that such
expectations or any of the forward-looking statements will prove to
be correct, and actual results will likely differ, and could differ
materially, from those projected or assumed in the forward-looking
statements. Important factors that could cause actual results to
differ materially from those indicated in the forward-looking
statements related to the offering include risks and uncertainties
related to the satisfaction of customary closing conditions.
Investors are cautioned not to unduly rely on any such
forward-looking statements.
All subsequent forward-looking statements
attributable to Merit or persons acting on its behalf are expressly
qualified in their entirety by these cautionary statements. Merit’s
actual results will likely differ, and may differ materially, from
anticipated results. Financial estimates are subject to change and
are not intended to be relied upon as predictions of future
operating results. All forward-looking statements included in this
release are made as of the date hereof and are based on information
available to Merit as of such date. Merit assumes no obligation to
update any forward-looking statement. If Merit does update or
correct one or more forward-looking statements, investors and
others should not conclude that Merit will make additional updates
or corrections.
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Contacts: |
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PR/Media Inquiries:Teresa
JohnsonMerit Medical |
Investor Inquiries:Mike
Piccinino, CFA, IRCWestwicke - ICR |
+1-801-208-4295 |
+1-443-213-0509 |
tjohnson@merit.com |
mike.piccinino@westwicke.com |
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