The 4% convertible senior notes due in 2025 are accompanied by a 13-day option for initial purchasers to buy up to an additional $25 million in notes. Varex expects the offering to close on June 9, subject to customary closing conditions, according to a news release.
Varex expects to bring in proceeds of $169 million, or $193.3 million if the initial purchasers exercise their option in full. It plans to use the proceeds to fund the net cost of entering into convertible note hedge transactions, with $75 million earmarked for repaying indebtedness under its credit agreement. The remainder of the proceeds will go toward general corporate purposes.
The connected hedge and warrant transactions Varex entered into include some of the initial purchasers or their affiliates and are designed to offset the effect of dilution from the conversion of the notes up to a 50% premium to today’s closing price.
Yesterday, the Salt Lake City-based company announced its intentions to offer the notes for $150 million with an additional $22.5 million available in the 13-day option, before upping both numbers with today’s pricing.
The notes will be senior, unsecured obligations of Varex, accruing interest at a 4% rate per annum, payable semi-annually in arrears on June 1 and Dec. 1 of each year, beginning on Dec. 1, 2020. They will mature on June 1, 2025, unless earlier converted, redeemed or repurchased, but may not be redeemed prior to June 1, 2023.