Wright Medical greenshoe lifts 2% convertible sale to $632.5 million

By Tali Rackner

Norfolk, Va., Feb. 13 – Underwriters for Wright Medical Group Inc.’s 2% cash convertible senior notes due 2020 exercised their over-allotment option in full, adding an additional $82.5 million, according to an 8-K filing with the Securities and Exchange Commission.

The company priced an upsized $550 million of the five-year convertibles on Feb. 10.

As previously reported, joint bookrunners were J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

The notes are subject to modification upon completion of the company’s pending merger with Tornier NV. After the merger, the company will be known as Wright Medical Group NV, and this company will fully guarantee obligations under the notes’ indenture.

The notes are non-callable with no puts, except a takeover put. There is dividend protection for any dividend paid.

There is also contingent conversion if the company’s shares trade above 130% of the initial conversion price.

In connection with the pricing of the notes, the company entered into convertible note hedge and warrant transactions, or a call spread. The strike on the warrants is $40 per share, which boosts the initial conversion premium from the company’s perspective to 57%.

About $292 million of proceeds will be used to repurchase about $240 million face value of the company’s outstanding 2% convertibles due 2017. Proceeds will also be used for general corporate purposes, including possible acquisitions, and about $51 million will be used to pay the net cost of the call spread.

Wright Medical is an Arlington, Tenn.-based orthopedic medical device company.

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