Alphatec talks $250 million five-year convertible notes to yield 0.5% to 1%, up 30% to 35%

By Abigail W. Adams

Portland, Me., Aug. 4 – Alphatec Holdings Inc. plans to price $250 million in five-year convertible notes after the market close on Thursday with price talk for a coupon of 0.5% to 1% and an initial conversion premium of 30% to 35%, according to a market source.

Morgan Stanley & Co. LLC is lead left bookrunner for the Rule 144A offering, which carries a greenshoe of $37.5 million.

The notes are non-callable until Aug. 6, 2024 and then subject to a 130% hurdle.

They are putable upon a fundamental change.

In connection with the offering, the company will enter into capped call transactions.

Proceeds will be used to cover the cost of the call spread; approximately $25 million will be used to repurchase shares of stock from the initial purchasers of the notes; approximately $45.2 million will be used to terminate its term loan; approximately $8.2 million will be used to terminate its subsidiary’s inventory financing agreement; and any remaining proceeds will be used for general corporate purposes.

Alphatec is a Carlsbad, Calif.-based medical device company.

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