Wright Medical Group, Inc. (NASDAQ: WMGI) (the “Company”) today announced the pricing of its offering (the “Offering”) of $260 million principal amount of cash convertible senior notes due 2017 (the “Notes”). The Notes are being offered and sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Company also granted the initial purchasers of the Notes an option to purchase up to an additional $40 million principal amount of Notes to cover over-allotments. The Offering is expected to close on August 31, 2012, subject to customary closing conditions. Interest will be payable on the Notes semi-annually at a rate of 2.00 percent per annum on February 15 and August 15 of each year, beginning February 15, 2013. Prior to February 15, 2017, the Notes will be convertible into cash at the option of the holder under certain conditions and, regardless of any conditions, thereafter until the second scheduled trading day immediately preceding the maturity date . The Notes will mature on August 15, 2017. The initial conversion rate for the Notes is 39.3140 shares of the Company’s common stock per $1,000 principal amount of the Notes, which is equivalent to a conversion price of approximately $25.44 per share of the Company’s common stock, representing an approximately 27.50% conversion premium based on the last reported sale price of the Company’s common stock of $19.95 per share on August 22, 2012. In connection with the pricing of the Notes, the Company has entered into privately negotiated convertible note hedge transactions with certain financial institutions (the “Option Counterparties”) to reduce its exposure under the Notes to future increases in the price of the Company’s common stock. The Company has also entered into separate privately negotiated warrant transactions with the Option Counterparties, and the warrants have an exercise price that is 50.00% higher than the last reported sale price per share of the Company’s common stock on August 22, 2012. The issuance of the warrants could have a dilutive effect on the Company’s common stock to the extent that the market price of the Company’s common stock exceeds the exercise price of the warrants. If the initial purchasers exercise their over-allotment option, the Company intends to enter into additional convertible note hedge and warrant transactions.
The Company estimates that the net proceeds of the Offering will be $251.2 million (or $289.3 million if the initial purchasers’ over-allotment option is exercised in full), after deducting the initial purchasers’ discounts and commissions and estimated offering expenses. The Company is using approximately $130 million of the net proceeds of the Offering to repay the outstanding term loan under its senior credit facility, $18.7 million to fund the cost of the convertible note hedge transactions described above (after such cost is partially offset by the proceeds to the Company from the sale of the warrant transactions described above), up to $29.1 million to fund any repurchases the Company is able to make of its convertible senior notes due 2014 and the remainder for general corporate purposes, including possible acquisitions.In connection with the convertible note hedge transactions and the separate warrant transactions, the Option Counterparties have advised the Company that they and/or their affiliates expect to enter into various derivative transactions in the Company’s common stock, and may purchase and sell the Company’s common stock in secondary market transactions, concurrently with or shortly after the pricing of the Notes. These hedging activities could initially raise or maintain the market price of the Company’s common stock and could subsequently otherwise affect the market price of the Company’s common stock. This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful. The offer and sale of the Notes have not been registered under the Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
Cautionary Note Regarding Forward-Looking StatementsThis press release contains forward-looking statements. These statements are based on current expectations or beliefs and are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company is providing this information as of the date of this news release and assumes no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this press release.