Inseego says Novatel holders tender 99.8% of convertibles due 2020 in exchange offer

By Susanna Moon

Chicago, Jan. 6 – Inseego Corp. said investors had tendered for exchange $119.75 million, or 99.79%, of the $120 million of 5.5% convertible senior notes due 2020 issued by its wholly owned subsidiary Novatel Wireless, Inc.

As announced Dec. 8, Inseego was offering to issue new 5.5% convertible senior notes due 2022 in exchange for the 5.5% convertibles.

Inseego also received the needed consents to amend the notes, according to a company announcement.

After settlement on Jan. 9, there will be $250,000 principal amount of the Novatel notes left outstanding.

Holders who participated in the offer will receive $1,000 principal amount of the new convertibles for each $1,000 principal amount of the existing notes.

Novatel was soliciting consents to amend its convertibles to eliminate certain events of default and substantially all of the restrictive covenants, including the merger covenant, which includes requirements that must be met for Novatel to consolidate, merge or sell all or substantially all of its assets and the reporting covenant, which requires Novatel to provide periodic reports to noteholders.

Those who tendered were deemed to have delivered consents. Consents could not be delivered without tendering.

The exchange offer and consent solicitation ended at 11:59 p.m. ET on Jan. 5.

Completion of the offer was subject to conditions including that an S-4 registration statement filed with the Securities and Exchange Commission becomes effective, that sufficient consents are delivered to allow Novatel to amend the notes and that holders of at least 98% of the existing notes tender.

The new convertibles will mature on June 15, 2022 and will be callable starting on June 15, 2018 at par subject to a 140% hurdle. They will be putable on June 15, 2020. The existing Novatel convertibles are not putable.

Interest will accrue from the most recent date on which interest was paid on the Novatel notes. There will be no separate payment of accrued interest.

The new convertibles will convert at a price of $4.70, subject to a contingent conversion hurdle of 130% until Dec. 15, 2021. The conversion price corresponds to a conversion rate of 212.766 shares per $1,000 principal amount compared to a conversion price of $5.00 and a conversion rate of 200 shares for the Novatel convertibles. The Novatel convertibles become freely convertible on Dec. 15, 2019.

Inseego said it was conducting the exchange offer and consent solicitation in order to facilitate the previously announced sale of its mobile broadband business, which includes its MiFi branded hotspots and USB modem product lines to T.C.L. Industries Holdings (H.K.) Ltd. and Jade Ocean Global Ltd. for $50 million. Closing is expected in the first quarter of 2017.

Jefferies LLC (212 284-8137) is dealer manager. D.F. King & Co., Inc. (212 269-5550, 800 820-2416 or inseego@dfking.com) is exchange agent and information agent.

Inseego is a San Diego-based provider of software-as-a-service and solutions for the internet of things.

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