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Endologix Announces Offering Of $75 Million Of Convertible Notes

Stocks in this article: ELGX

IRVINE, Calif., Dec. 3, 2013 (GLOBE NEWSWIRE) -- Endologix, Inc. (Nasdaq:ELGX) ("Endologix" or the "Company") today announced that it intends, subject to market and other conditions, to offer $75 million aggregate principal amount of convertible senior notes due 2018 (the "Convertible Notes") in an offering registered under the Securities Act of 1933, as amended. The Company expects to grant an option to the underwriters for up to an additional $11.25 million aggregate principal amount of Convertible Notes solely to cover overallotments. The Convertible Notes are expected to pay interest semiannually and will be convertible into shares of the Company's common stock ("Common Stock"), cash or a combination of cash and shares of the Company's Common Stock, at the Company's election, based on a conversion rate to be determined at the pricing of the Convertible Notes. The Convertible Notes will mature on December 15, 2018, unless repurchased, redeemed or converted in accordance with their terms prior to such date. Prior to September 15, 2018, the Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the second scheduled trading day immediately preceding the maturity date.  On or after December 15, 2016, the Company may from time to time redeem for cash all or part of the Convertible Notes in certain circumstances.

The Company expects to use the net proceeds for general corporate purposes, which may include working capital, continued investment in geographic expansion, research and development and clinical studies. In addition, the Company intends to apply a portion of the net proceeds from the sale of the Convertible Notes to fund the cost of certain capped call transactions (described below). 

In connection with the pricing of the Convertible Notes, the Company expects to enter into a capped call transaction with Bank of America, N.A. (the "Option Counterparty"), an affiliate of BofA Merrill Lynch, one of the underwriters of the Convertible Notes. The capped call transaction is expected generally to reduce the potential dilution and/or offset the cash payments the Company is required to make in excess of the principal amount upon conversion of the Convertible Notes in the event that the market price of the Company's Common Stock is greater than the strike price of the capped call transaction, which will initially correspond to the initial conversion price of the Convertible Notes, with such reduction and/or offset subject to a cap based on the cap price of the capped call transaction.  If the underwriters exercise their option to purchase additional Convertible Notes, the Company expects to enter into an additional capped call transaction with the Option Counterparty.

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