Haemonetics Announces Upsized Private Placement of $600 Million Convertible Senior Notes

Haemonetics Corporation (NYSE: HAE) has announced the pricing of its $600 million offering of 2.50% Convertible Senior Notes due 2029. This private offering, increased from an initial $525 million, targets qualified institutional buyers under Rule 144A of the Securities Act of 1933. The offering is set to close on May 28, 2024, pending customary closing conditions. Initial purchasers have the option to buy an additional $100 million in notes within 13 days of issuance.

The senior, unsecured notes will mature on June 1, 2029, unless repurchased, redeemed, or converted earlier. Noteholders can convert their notes under certain conditions before December 1, 2028, and at any time after that until two trading days before maturity. Conversion amounts up to the $1,000 principal will be settled in cash, with any excess settled in cash, Haemonetics’ common stock, or both, at the company’s discretion. The initial conversion rate is 8.5385 shares per $1,000, equating to a conversion price of approximately $117.12 per share—a 30% premium over the May 22, 2024, closing price of $90.09. This rate and price are subject to adjustment under certain conditions.

The notes are not redeemable before June 5, 2027. After that date, Haemonetics can redeem them if its stock price exceeds 130% of the conversion price for a specified period. The redemption price will include the principal plus any accrued interest.

In the event of a “fundamental change,” noteholders can require Haemonetics to repurchase their notes for cash, equal to the principal plus any accrued interest.

Haemonetics expects net proceeds of approximately $584.8 million from the offering, or $682.3 million if the additional notes are purchased. These funds will cover the $75.6 million cost of capped call transactions, repurchase $200 million of its 0.00% Convertible Senior Notes due 2026, repay $230 million on its revolving credit facility, and support general corporate purposes.

The company has entered into capped call transactions with the initial purchasers or their affiliates, covering the number of shares underlying the notes, subject to anti-dilution adjustments. The initial cap price is $180.18 per share, a 100% premium over the May 22, 2024, closing price. These transactions aim to mitigate potential stock dilution and excess cash payments upon note conversion. However, if Haemonetics’ stock price exceeds the cap price, there may still be dilution.

Option counterparties or their affiliates may engage in hedging activities, which could impact Haemonetics’ stock or note prices. These activities may include entering into derivatives or buying/selling stock in the secondary market before the notes mature.

Concurrently with the note pricing, Haemonetics repurchased $200 million of its 2026 notes for approximately $185.5 million in cash. Holders of these repurchased notes may have hedged their positions and could engage in transactions impacting Haemonetics’ stock price.

The notes will only be sold to qualified institutional buyers under Rule 144A of the Securities Act. They are not registered under the Securities Act or other securities laws and cannot be offered or sold without registration or an applicable exemption. This announcement is not an offer to sell or buy the notes or any shares issuable upon conversion in any jurisdiction where such offers or sales would be illegal.

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