Merit Medical Systems (Nasdaq:MMSI) announced today that it priced an upsized private placement worth $650 million.
South Jordan, Utah-based Merit is offering 3% Convertible Senior Notes due 2029 in the offering, only to qualified institutional buyers. The company granted the initial purchasers an option to purchase up to an additional $97.5 million during a 13-day period. That period begins on and includes the date of the first issuance.
Merit upsized this offering from a previously announced placement of $550 million. It expects the sale of notes to initial purchasers to close on Dec. 8, 2023.
The notes bear 3% interest per year, payable semi-annually in arrears on Feb. 1 and Aug. 1 of each year, starting in August 2024. Holders have the right to require Merit to repurchase all or part of their notes upon the occurrence of a fundamental change in cash at a fundamental change repurchase price of 100% of their principal amount plus accrued and unpaid interest to, but excluding the fundamental change repurchase date.
Merit also entered into privately negotiated capped call transactions with one or more initial purchasers and/or their affiliates. The company expects these transactions to mitigate potential dilution to common stock upon the conversion of notes.
According to a news release, Merit estimates net proceeds of approximately $630.5 million. It could reach as high as $725.1 million if initial purchasers exercise their option to buy additional notes in full. Merit intends to use approximately $57.9 million in proceeds to pay the cost of the capped call transactions.
Merit intends to use the remaining proceeds for general corporate purposes. That could include repayment or reduction of existing debt, sales and marketing activities, medical affairs and educational efforts, R&D, clinical studies, working capital, capital expenditures and investments in and acquisitions of other companies, products or technologies. However,, Merit has no commitments with respect to acquisitions of that nature.