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Varex greenshoe exercised, lifts 4% convertibles to $200 million
By Wendy Van Sickle
Columbus, Ohio, June 9 – Underwriters for Varex Imaging Corp.’s five-year convertible notes fully exercised their $25 million greenshoe, lifting the total size of the deal to $200 million, according to a news release issued Tuesday.
The company priced an upsized $175 million of the convertibles after the market close on Thursday at par at the cheap end of talk with a coupon of 4% and an initial conversion premium of 25%, as previously reported.
Price talk was for a coupon of 3.5% to 4% and an initial conversion premium of 25% to 30%, according to a market source.
Goldman Sachs & Co. LLC, BofA Securities Inc. and Wells Fargo Securities LLC were the bookrunners for the Rule 144A offering.
The initial size of the deal was $150 million with a greenshoe of $22.5 million.
The notes are contingently convertible until Dec. 1, 2024.
They are non-callable until June 1, 2023 and then subject to a 130% hurdle.
The notes are putable upon a fundamental change. There is dividend protection.
The notes will be settled in cash, shares or a combination of both at the company’s option.
In connection with the pricing of the notes, the company entered into convertible note hedge and warrant transactions with the strike price on the warrant transactions representing a 50% premium over the last reported sales price of stock.
Net proceeds are expected to be $193.3 million with the greenshoe exercised in full.
Proceeds will be used to cover the cost of the hedge transactions, $75 million will be used to partially repay debt under its credit agreement, with the remaining amount to be used for general corporate purposes.
Varex Imaging is a Salt Lake City-based designer and manufacturer of X-ray imaging components.
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