Alphatec Holdings, Inc. (Nasdaq: ATEC) today announced the
pricing of its offering of $275,000,000 aggregate principal amount
of 0.75% 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”). The offering size was increased from the previously
announced offering size of $250,000,000 aggregate principal amount
of notes. The issuance and sale of the notes are scheduled to
settle on August 10, 2021, subject to customary closing conditions.
Alphatec also granted 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
$41,250,000 principal amount of notes.
The notes will be senior, unsecured obligations of Alphatec and
will accrue interest at a rate of 0.75% per annum, payable
semi-annually in arrears on February 1 and August 1 of each year,
beginning on February 1, 2022. The notes 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
initial conversion rate is 54.5316 shares of common stock per
$1,000 principal amount of notes, which represents an initial
conversion price of approximately $18.34 per share of common stock.
The initial conversion price represents a premium of approximately
32.5% over the last reported sale price of Alphatec’s common stock
on The Nasdaq Global Select Market of $13.84 per share on August 5,
2021. The conversion rate and conversion price will be subject to
adjustment upon the occurrence of certain events.
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.
In connection with the pricing of the notes, Alphatec entered
into 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. The cap price of the
capped call transactions will initially be $27.68 per share of
Alphatec’s common stock, which represents a premium of 100% over
the last reported sale price of Alphatec’s common stock on The
Nasdaq Global Select Market of $13.84 per share on August 5, 2021,
and is subject to certain adjustments under the terms of the capped
call transactions. 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 estimates that the net proceeds from the offering will
be approximately $266.2 million (or approximately $306.2 million if
the initial purchasers fully exercise their option to purchase
additional notes), after deducting the initial purchasers’
discounts and commissions and estimated offering expenses. Alphatec
intends to use approximately $34.7 million of the net proceeds to
fund the cost of entering into the capped call transactions.
Alphatec expects to use approximately $25.0 million of the net
proceeds to repurchase approximately 1.806 million 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, and may
have affected the initial terms of the notes, including the initial
conversion price.
The notes were 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
Machine™ 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 completion of the
offering, the expected amount and intended use of the net proceeds,
the effects of entering into the capped call transactions described
above and the actions of the option counterparties and their
respective affiliates 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, the
satisfaction of the closing conditions related to the offering 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 offering described in this
press release and, if the offering is consummated, cannot provide
any assurances regarding 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/20210805006224/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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