ATEC Announces Proposed Offering of Convertible Senior Notes
Alphatec Holdings, Inc. (Nasdaq: ATEC), a company focused on revolutionizing spine surgery, has announced its intention to offer $300,000,000 in aggregate principal amount of convertible senior notes due 2030 (the “notes”) in a private offering to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The offering is subject to market conditions and other factors. Additionally, ATEC plans to grant the initial purchasers of the notes an option to purchase an additional $50,000,000 in principal amount of the notes, with settlement to occur within 13 days of the issuance date.
Details of the Notes Offering
The convertible senior notes will be senior, unsecured obligations of ATEC, accruing interest that will be payable semi-annually in arrears. The notes will mature on March 15, 2030, unless they are repurchased, redeemed, or converted before then. Prior to September 17, 2029, noteholders will only be able to convert their notes upon the occurrence of specific events. However, from September 17, 2029, noteholders will have the right to convert their notes at any time until the second scheduled trading day before the maturity date.
When it comes to the settlement of conversions, ATEC will pay or deliver cash, shares of its common stock, or a combination of both, depending on the situation. The company also reserves the right to redeem the notes, in whole or in part, for cash starting on or after March 20, 2028, under specific conditions. The redemption price will equal the principal amount of the notes being redeemed, plus any accrued interest.
If a “fundamental change” occurs, noteholders may have the option to require ATEC to repurchase their notes for the principal amount, plus any accrued and unpaid interest. The final terms of the notes, including the interest rate and initial conversion rate, will be determined at the pricing of the offering.
Capped Call Transactions
Alongside the offering, ATEC expects to enter into one or more capped call transactions with the initial purchasers of the notes or their affiliates. These capped call transactions are designed to reduce potential dilution to ATEC’s common stock upon the conversion of the notes. These transactions also aim to offset any cash payments ATEC may need to make in excess of the principal amount of the notes converted.
If the initial purchasers exercise their option to buy additional notes, ATEC plans to enter into additional capped call transactions with the option counterparties. The counterparties may also hedge their positions by entering into or unwinding various derivative transactions with respect to ATEC’s common stock, which could affect the market price of ATEC’s stock and the notes.
Use of Proceeds
ATEC intends to use a portion of the proceeds from the offering to fund the cost of entering into the capped call transactions. Additionally, part of the net proceeds will be used to repurchase and cancel some of its existing 0.75% convertible senior notes due 2026 in privately negotiated transactions. The remainder of the net proceeds will be used for general corporate purposes. If the initial purchasers exercise their option to purchase additional notes, ATEC will use some of the additional proceeds to fund the cost of additional capped call transactions.
Furthermore, holders of the 2026 notes that are repurchased may purchase ATEC’s common stock in the open market to unwind any hedge positions. This activity may affect ATEC’s stock price and could result in a higher initial conversion price for the notes being offered.
Offering and Legal Considerations
The notes will only be offered to qualified institutional buyers under Rule 144A of the Securities Act. The offer and sale of the notes and any shares of common stock issued upon conversion of the notes will not be registered under the Securities Act or any other securities laws. As a result, the notes and any shares cannot be offered or sold except in transactions exempt from registration requirements.
This announcement does not constitute an offer to sell or solicit an offer to buy the notes or any shares of common stock that may be issued upon conversion of the notes.
About ATEC
Alphatec Holdings, Inc. is a medical device company with a focus on revolutionizing spine surgery. Through its wholly-owned subsidiaries, including Alphatec Spine, Inc., EOS Imaging S.A.S., and SafeOp Surgical, Inc., ATEC aims to create innovative solutions that improve patient outcomes and the overall surgical process. ATEC’s Organic Innovation Machine™ integrates its expanding AlphaInformatiX Platform, providing new approaches to spine surgery that prioritize safety, reproducibility, and informed decision-making. ATEC’s vision is to become the standard-bearer in spine surgery by offering advanced technologies and solutions to meet the evolving needs of healthcare providers and patients alike.
