INVACARE CORPORATION (NYSE:IVC) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
Purchase Agreement
On June 8, 2017, Invacare Corporation (the Company) entered into
a Purchase Agreement (the Purchase Agreement) with Goldman Sachs
Co. LLC (the Initial Purchaser), relating to the sale of $105
million aggregate principal amount of the Companys 4.50%
Convertible Senior Notes due 2022 (the Notes) to the Initial
Purchaser. The Company also granted the Initial Purchaser an
option to purchase up to an additional $15 million aggregate
principal amount of the Notes solely to cover over-allotments.
a Purchase Agreement (the Purchase Agreement) with Goldman Sachs
Co. LLC (the Initial Purchaser), relating to the sale of $105
million aggregate principal amount of the Companys 4.50%
Convertible Senior Notes due 2022 (the Notes) to the Initial
Purchaser. The Company also granted the Initial Purchaser an
option to purchase up to an additional $15 million aggregate
principal amount of the Notes solely to cover over-allotments.
On June 9, 2017, the Initial Purchaser notified the Company of
its election to purchase an additional $15 million aggregate
principal amount of the Notes to the over-allotment option.
its election to purchase an additional $15 million aggregate
principal amount of the Notes to the over-allotment option.
The Purchase Agreement includes customary representations,
warranties and covenants. Under the terms of the Purchase
Agreement, the Company has agreed to indemnify the Initial
Purchaser against certain liabilities.
warranties and covenants. Under the terms of the Purchase
Agreement, the Company has agreed to indemnify the Initial
Purchaser against certain liabilities.
The foregoing description of the Purchase Agreement is qualified
in its entirety by reference to the Purchase Agreement, which is
filed as Exhibit 1.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
in its entirety by reference to the Purchase Agreement, which is
filed as Exhibit 1.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
Indenture and the Notes
On June 14, 2017, the Company issued $120 million aggregate
principal amount of the Notes, to an Indenture, dated as of such
date (the Indenture), between the Company and Wells Fargo Bank,
National Association, as trustee (the Trustee). The Notes will
bear interest at the annual rate of 4.50%, payable on June 1 and
December 1 of each year, beginning on December 1, 2017, and will
mature on June 1, 2022 unless earlier converted or repurchased.
Unless and until the Company obtains shareholder approval of the
issuance of the Companys common shares upon conversion of the
Notes and upon conversion of its 5.00% Convertible Senior Notes
due 2021 (the “2021 Notes”) as required under applicable New York
Stock Exchange rules, the Notes will be convertible, subject to
certain conditions, into solely cash. If the Company obtains such
shareholder approval, the Notes may be settled in cash, the
Companys common shares or a combination of cash and the Companys
common shares, at the Companys election (subject to, and in
accordance with, the settlement provisions of the Indenture). The
initial conversion rate for the Notes is 61.6095 common shares
(subject to adjustment as provided for in the Indenture) per
$1,000 principal amount of the Notes, which is equal to an
initial conversion price of approximately $16.23 per share,
representing a conversion premium of approximately 32.5% above
the closing price of the common shares of $12.25 per share on
June 8, 2017. In addition, following certain corporate events
that occur prior to the maturity date as described in the
Indenture, the Company will pay a make-whole premium by
increasing the conversion rate for a holder who elects to convert
its Notes in connection with such a corporate event in certain
circumstances.
principal amount of the Notes, to an Indenture, dated as of such
date (the Indenture), between the Company and Wells Fargo Bank,
National Association, as trustee (the Trustee). The Notes will
bear interest at the annual rate of 4.50%, payable on June 1 and
December 1 of each year, beginning on December 1, 2017, and will
mature on June 1, 2022 unless earlier converted or repurchased.
Unless and until the Company obtains shareholder approval of the
issuance of the Companys common shares upon conversion of the
Notes and upon conversion of its 5.00% Convertible Senior Notes
due 2021 (the “2021 Notes”) as required under applicable New York
Stock Exchange rules, the Notes will be convertible, subject to
certain conditions, into solely cash. If the Company obtains such
shareholder approval, the Notes may be settled in cash, the
Companys common shares or a combination of cash and the Companys
common shares, at the Companys election (subject to, and in
accordance with, the settlement provisions of the Indenture). The
initial conversion rate for the Notes is 61.6095 common shares
(subject to adjustment as provided for in the Indenture) per
$1,000 principal amount of the Notes, which is equal to an
initial conversion price of approximately $16.23 per share,
representing a conversion premium of approximately 32.5% above
the closing price of the common shares of $12.25 per share on
June 8, 2017. In addition, following certain corporate events
that occur prior to the maturity date as described in the
Indenture, the Company will pay a make-whole premium by
increasing the conversion rate for a holder who elects to convert
its Notes in connection with such a corporate event in certain
circumstances.
Holders of the Notes may convert their Notes at their option at
any time prior to the close of business on the business day
immediately preceding December 1, 2021 in multiples of $1,000
principal amount, only under the following circumstances:
any time prior to the close of business on the business day
immediately preceding December 1, 2021 in multiples of $1,000
principal amount, only under the following circumstances:
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during any calendar quarter commencing after the calendar
quarter ending on September 30, 2017 (and only during such calendar quarter), if the last reported sale price of the Companys common shares for at least 20 trading days (whether or not consecutive) during |
a period of 30 consecutive trading days ending on the last
trading day of the immediately preceding calendar quarter is
greater than 130% of the conversion price for the Notes on each
applicable trading day;
trading day of the immediately preceding calendar quarter is
greater than 130% of the conversion price for the Notes on each
applicable trading day;
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during the five business day period after any ten
consecutive trading day period (the measurement period) in which the trading price (as defined in the Indenture) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Companys common shares and the conversion rate for the Notes on each such trading day; or |
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upon the occurrence of specified corporate events described
in the Indenture. |
On or after December 1, 2021 until the close of business on the
second scheduled trading day immediately preceding June 1, 2022,
holders may convert their Notes, in multiples of $1,000 principal
amount, at the option of the holder regardless of the foregoing
circumstances.
second scheduled trading day immediately preceding June 1, 2022,
holders may convert their Notes, in multiples of $1,000 principal
amount, at the option of the holder regardless of the foregoing
circumstances.
The Company may not redeem the Notes prior to the maturity date,
and no sinking fund is provided for the Notes.
and no sinking fund is provided for the Notes.
If the Company undergoes a fundamental change, as described in
the Indenture, prior to the maturity date of the Notes, holders
of the Notes will, subject to specified conditions, have the
right, at their option, to require the Company to repurchase for
cash all or a portion of their Notes at a repurchase price equal
to 50% of the principal amount of the Notes to be repurchased,
plus accrued and unpaid interest, if any, to, but not including,
the “fundamental change repurchase date” (as defined in the
Indenture).
the Indenture, prior to the maturity date of the Notes, holders
of the Notes will, subject to specified conditions, have the
right, at their option, to require the Company to repurchase for
cash all or a portion of their Notes at a repurchase price equal
to 50% of the principal amount of the Notes to be repurchased,
plus accrued and unpaid interest, if any, to, but not including,
the “fundamental change repurchase date” (as defined in the
Indenture).
The Indenture provides for customary events of default. In the
case of an event of default with respect to the Notes arising
from specified events of bankruptcy or insolvency, all
outstanding Notes will become due and payable immediately without
further action or notice. If any other event of default with
respect to the Notes under the Indenture occurs or is continuing,
the Trustee or holders of at least 25% in aggregate principal
amount of the then outstanding Notes may declare the principal
amount of the Notes to be immediately due and payable.
case of an event of default with respect to the Notes arising
from specified events of bankruptcy or insolvency, all
outstanding Notes will become due and payable immediately without
further action or notice. If any other event of default with
respect to the Notes under the Indenture occurs or is continuing,
the Trustee or holders of at least 25% in aggregate principal
amount of the then outstanding Notes may declare the principal
amount of the Notes to be immediately due and payable.
The Notes are senior unsecured obligations of the Company and
will rank senior in right of payment to any of the Companys
indebtedness that is expressly subordinated in right of payment
to the Notes; equal in right of payment to any of the Companys
unsecured indebtedness that is not so subordinated, including the
2021 Notes; effectively junior in right of payment to any of the
Companys secured indebtedness to the extent of the value of the
assets securing such indebtedness; and structurally junior to all
indebtedness and other liabilities (including trade payables) of
the Companys subsidiaries.
will rank senior in right of payment to any of the Companys
indebtedness that is expressly subordinated in right of payment
to the Notes; equal in right of payment to any of the Companys
unsecured indebtedness that is not so subordinated, including the
2021 Notes; effectively junior in right of payment to any of the
Companys secured indebtedness to the extent of the value of the
assets securing such indebtedness; and structurally junior to all
indebtedness and other liabilities (including trade payables) of
the Companys subsidiaries.
In certain circumstances if, at any time during the six-month
period beginning on, and including, the date that is six months
after the last date of original issuance of the Notes, the
Company fails to timely file certain documents or reports
required under the Securities Exchange Act of 1934, as amended,
or the Notes are not otherwise freely tradable by holders of the
Notes other than the Companys affiliates, additional interest
will accrue on the Notes during the period in which its failure
to file has occurred and is continuing or such Notes are not
otherwise freely tradable by holders other than the Companys
affiliates.
period beginning on, and including, the date that is six months
after the last date of original issuance of the Notes, the
Company fails to timely file certain documents or reports
required under the Securities Exchange Act of 1934, as amended,
or the Notes are not otherwise freely tradable by holders of the
Notes other than the Companys affiliates, additional interest
will accrue on the Notes during the period in which its failure
to file has occurred and is continuing or such Notes are not
otherwise freely tradable by holders other than the Companys
affiliates.
In addition, if, and for so long as, the restrictive legend on
the Notes has not been removed, the Notes are assigned a
restricted CUSIP number or the Notes are not otherwise freely
tradable by holders other than the Companys affiliates (without
restrictions to U.S. securities laws or the terms of
the Notes has not been removed, the Notes are assigned a
restricted CUSIP number or the Notes are not otherwise freely
tradable by holders other than the Companys affiliates (without
restrictions to U.S. securities laws or the terms of
the Indenture or the Notes) as of the 380th day after the last
date of original issuance of the Notes, the Company will pay
additional interest on the Notes during the period in which the
Notes remain so restricted.
date of original issuance of the Notes, the Company will pay
additional interest on the Notes during the period in which the
Notes remain so restricted.
The foregoing description of the Indenture and the Notes is
qualified in its entirety by reference to each of the Indenture
and form of Note, which are filed as Exhibit 4.1 to this Current
Report on Form 8-K and are incorporated herein by reference.
qualified in its entirety by reference to each of the Indenture
and form of Note, which are filed as Exhibit 4.1 to this Current
Report on Form 8-K and are incorporated herein by reference.
Convertible Note Hedge and Warrant Transactions
On June 8, 2017, in connection with the pricing of the Notes, the
Company entered into a convertible note hedge transaction (the
Base Note Hedge Transaction) with Goldman Sachs Co. LLC (the
Option Counterparty). On June 9, 2017, in connection with the
Initial Purchasers exercise of its over-allotment option to
purchase additional Notes, the Company entered into an additional
convertible note hedge transaction (the Additional Note Hedge
Transaction and, together with the Base Note Hedge Transaction,
the Note Hedge Transactions) with the Option Counterparty.
Company entered into a convertible note hedge transaction (the
Base Note Hedge Transaction) with Goldman Sachs Co. LLC (the
Option Counterparty). On June 9, 2017, in connection with the
Initial Purchasers exercise of its over-allotment option to
purchase additional Notes, the Company entered into an additional
convertible note hedge transaction (the Additional Note Hedge
Transaction and, together with the Base Note Hedge Transaction,
the Note Hedge Transactions) with the Option Counterparty.
The Note Hedge Transactions are expected generally to reduce the
potential dilution and/or offset any cash payments the Company is
required to make in excess of the principal amount due, as the
case may be, upon conversion of the Notes in the event that the
market price of the Companys common shares is greater than the
strike price of the Note Hedge Transactions, which is initially
$16.2313 (subject to adjustment), corresponding to the initial
conversion price of the Notes.
potential dilution and/or offset any cash payments the Company is
required to make in excess of the principal amount due, as the
case may be, upon conversion of the Notes in the event that the
market price of the Companys common shares is greater than the
strike price of the Note Hedge Transactions, which is initially
$16.2313 (subject to adjustment), corresponding to the initial
conversion price of the Notes.
On June 8, 2017, the Company also entered into a separate,
privately negotiated warrant transaction with the Option
Counterparty (the Base Warrant Transaction). On June 9, 2017, the
Company entered into an additional privately negotiated warrant
transaction (the Additional Warrant Transaction and, together
with the Base Warrant Transaction, the Warrant Transactions) with
the Option Counterparty. In the Warrant Transactions, the Company
sold net-share-settled warrants to the Option Counterparty
initially relating to the same number of the Companys common
shares initially underlying the Notes, subject to customary
anti-dilution adjustments. The strike price of the warrants will
initially be $21.4375 per share (subject to adjustment), which is
approximately 75% above the last reported sale price of the
Companys common shares on June 8, 2017. The Warrant Transactions
could have a dilutive effect to the Companys shareholders to the
extent that the market price per share of the Companys common
shares, as measured under the terms of the Warrant Transactions,
exceeds the applicable strike price of the warrants.
privately negotiated warrant transaction with the Option
Counterparty (the Base Warrant Transaction). On June 9, 2017, the
Company entered into an additional privately negotiated warrant
transaction (the Additional Warrant Transaction and, together
with the Base Warrant Transaction, the Warrant Transactions) with
the Option Counterparty. In the Warrant Transactions, the Company
sold net-share-settled warrants to the Option Counterparty
initially relating to the same number of the Companys common
shares initially underlying the Notes, subject to customary
anti-dilution adjustments. The strike price of the warrants will
initially be $21.4375 per share (subject to adjustment), which is
approximately 75% above the last reported sale price of the
Companys common shares on June 8, 2017. The Warrant Transactions
could have a dilutive effect to the Companys shareholders to the
extent that the market price per share of the Companys common
shares, as measured under the terms of the Warrant Transactions,
exceeds the applicable strike price of the warrants.
The Company used $10.68 million of the net proceeds of the
offering of the Notes to pay the cost of the Note Hedge
Transactions (after such cost was partially offset by the
proceeds to the Company from the sale of warrants in the Warrant
Transactions).
offering of the Notes to pay the cost of the Note Hedge
Transactions (after such cost was partially offset by the
proceeds to the Company from the sale of warrants in the Warrant
Transactions).
The Note Hedge Transactions and the Warrant Transactions are
separate transactions, in each case, entered into by the Company
with the Option Counterparty, and are not part of the terms of
the Notes and will not affect any holders rights under the Notes.
Holders of the Notes will not have any rights with respect to the
Note Hedge Transactions or the Warrant Transactions.
separate transactions, in each case, entered into by the Company
with the Option Counterparty, and are not part of the terms of
the Notes and will not affect any holders rights under the Notes.
Holders of the Notes will not have any rights with respect to the
Note Hedge Transactions or the Warrant Transactions.
The foregoing description of the Note Hedge Transactions and
Warrant Transactions is qualified in its entirety by reference to
the confirmations for the Note Hedge Transactions, which are
attached as Exhibits 10.1 and 10.3 to this Current Report on Form
8-K, and the Warrant Transactions, which are attached as Exhibits
10.2 and 10.4 to this Current Report on Form 8-K, and
incorporated herein by reference.
Warrant Transactions is qualified in its entirety by reference to
the confirmations for the Note Hedge Transactions, which are
attached as Exhibits 10.1 and 10.3 to this Current Report on Form
8-K, and the Warrant Transactions, which are attached as Exhibits
10.2 and 10.4 to this Current Report on Form 8-K, and
incorporated herein by reference.
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Item 2.03.
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Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth under Item 1.01 of this Current Report
on Form 8-K under the heading Indenture and the Notes is
incorporated herein by reference.
on Form 8-K under the heading Indenture and the Notes is
incorporated herein by reference.
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Item 3.02.
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Unregistered Sales of Equity Securities.
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The information set forth under Item 1.01 of this Current Report
on Form 8-K is incorporated herein by reference.
on Form 8-K is incorporated herein by reference.
As described in Item 1.01 of this Current Report on Form 8-K, on
June 14, 2017, the Company issued $120 million aggregate
principal amount of Notes to the Initial Purchaser in a private
placement to exemptions from the registration requirements of the
Securities Act of 1933, as amended (the Securities Act), to the
terms of the Purchase Agreement. The Company offered and sold the
Notes to the Initial Purchaser in reliance on the exemption from
registration provided by Section 4(a)(2) of the Securities Act,
for resale by such Initial Purchaser to qualified institutional
buyers to the exemption from registration provided by Rule 144A
under the Securities Act. Unless and until the Company obtains
shareholder approval of the issuance of the Companys common
shares upon conversion of the Notes and upon conversion of its
2021 Notes as required under applicable New York Stock Exchange
rules, the Notes will be convertible, subject to certain
conditions, into solely cash. If the Company obtains such
shareholder approval, the Notes may be settled in cash, the
Companys common shares or a combination of cash and the Companys
common shares, at the Companys election (subject to, and in
accordance with, the settlement provisions of the Indenture).
Neither the Notes nor the underlying common shares (if
conversions of the Notes are settled through delivery of common
shares) have been registered under the Securities Act or may be
offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
June 14, 2017, the Company issued $120 million aggregate
principal amount of Notes to the Initial Purchaser in a private
placement to exemptions from the registration requirements of the
Securities Act of 1933, as amended (the Securities Act), to the
terms of the Purchase Agreement. The Company offered and sold the
Notes to the Initial Purchaser in reliance on the exemption from
registration provided by Section 4(a)(2) of the Securities Act,
for resale by such Initial Purchaser to qualified institutional
buyers to the exemption from registration provided by Rule 144A
under the Securities Act. Unless and until the Company obtains
shareholder approval of the issuance of the Companys common
shares upon conversion of the Notes and upon conversion of its
2021 Notes as required under applicable New York Stock Exchange
rules, the Notes will be convertible, subject to certain
conditions, into solely cash. If the Company obtains such
shareholder approval, the Notes may be settled in cash, the
Companys common shares or a combination of cash and the Companys
common shares, at the Companys election (subject to, and in
accordance with, the settlement provisions of the Indenture).
Neither the Notes nor the underlying common shares (if
conversions of the Notes are settled through delivery of common
shares) have been registered under the Securities Act or may be
offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
Additionally, as described in Item 1.01 of this Current Report on
Form 8-K, on June 8, 2017, the Company entered into the Base
Warrant Transaction with the Option Counterparty, and June 9,
2017, the Company entered into the Additional Warrant Transaction
with the Option Counterparty. to the Warrant Transactions, the
Company issued warrants to the Option Counterparty initially
relating to the same number of common shares of the Company
initially underlying the Notes, with a strike price of $21.4375
per share. The number of warrants and the strike price are
subject to adjustment under certain circumstances described in
the confirmations for the Warrant Transactions. The Company
offered and sold the warrants in reliance on the exemption from
registration provided by Section 4(a)(2) of the Securities Act.
Neither the warrants nor the underlying common shares (issuable
in the event the market price per share of the common shares
exceeds the strike price of the warrants (under the terms of the
Warrant Transactions) on the date the warrants are exercised)
have been registered under the Securities Act. Neither the
warrants nor such underlying common shares may be offered or sold
in the United States absent registration or an applicable
exemption from registration requirements.
Form 8-K, on June 8, 2017, the Company entered into the Base
Warrant Transaction with the Option Counterparty, and June 9,
2017, the Company entered into the Additional Warrant Transaction
with the Option Counterparty. to the Warrant Transactions, the
Company issued warrants to the Option Counterparty initially
relating to the same number of common shares of the Company
initially underlying the Notes, with a strike price of $21.4375
per share. The number of warrants and the strike price are
subject to adjustment under certain circumstances described in
the confirmations for the Warrant Transactions. The Company
offered and sold the warrants in reliance on the exemption from
registration provided by Section 4(a)(2) of the Securities Act.
Neither the warrants nor the underlying common shares (issuable
in the event the market price per share of the common shares
exceeds the strike price of the warrants (under the terms of the
Warrant Transactions) on the date the warrants are exercised)
have been registered under the Securities Act. Neither the
warrants nor such underlying common shares may be offered or sold
in the United States absent registration or an applicable
exemption from registration requirements.
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Item 7.01.
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Regulation FD Disclosure.
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On June 8, 2017, the Company issued a press release (the Pricing
Release) announcing the pricing of the private offering of the
Notes, as well as the Base Note Hedge Transaction and the Base
Warrant Transaction entered into by the Company with the Option
Counterparty.
Release) announcing the pricing of the private offering of the
Notes, as well as the Base Note Hedge Transaction and the Base
Warrant Transaction entered into by the Company with the Option
Counterparty.
The offering of Notes is not being registered under the
Securities Act, or the securities laws of any other jurisdiction.
The Notes may not be offered or sold in the United States except
in transactions exempt from, or not subject to, the registration
requirements of the Securities Act and any applicable state
securities laws.
Securities Act, or the securities laws of any other jurisdiction.
The Notes may not be offered or sold in the United States except
in transactions exempt from, or not subject to, the registration
requirements of the Securities Act and any applicable state
securities laws.
This Current Report on Form 8-K does not constitute an offer to
sell or a solicitation of an offer to buy the Notes, nor shall
there be any offer or sale of Notes in any state or jurisdiction
in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of
such jurisdiction.
sell or a solicitation of an offer to buy the Notes, nor shall
there be any offer or sale of Notes in any state or jurisdiction
in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of
such jurisdiction.
The full text of the Pricing Release is furnished as Exhibit 99.1
to this Current Report on Form 8-K.
to this Current Report on Form 8-K.
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Item 9.01.
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Financial Statements and Exhibits.
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(d) Exhibits.
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Exhibit Number
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Description of Exhibit
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1.1
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Purchase Agreement, dated as of June 8, 2017, by and
among Invacare Corporation and Goldman Sachs Co. LLC, as the Initial Purchaser. |
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4.1
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Indenture, dated as of June 14, 2017, by and between
Invacare Corporation and Wells Fargo Bank, National Association (including the form of the 4.50% Convertible Senior Notes due 2022). |
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10.1
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Base Call Option Transaction Confirmation, dated June
8, 2017, between Goldman Sachs Co. LLC and Invacare Corporation. |
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10.2
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Base Warrants Confirmation, dated June 8, 2017, between
Goldman Sachs Co. LLC and Invacare Corporation. |
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10.3
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Additional Call Option Transaction Confirmation, dated
June 9, 2017, between Goldman Sachs Co. LLC and Invacare Corporation. |
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10.4
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Additional Warrants Confirmation, dated June 9, 2017,
between Goldman Sachs Co. LLC and Invacare Corporation. |
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99.1
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Press Release, dated June 8, 2017.
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About INVACARE CORPORATION (NYSE:IVC)
Invacare Corporation is a manufacturer and distributor for medical equipment used in non-acute care settings. The Company’s geographical segments are Europe; North America, which includes North America/Home Medical Equipment (North America/HME) and Institutional Products Group (IPG) segments, and Asia/Pacific. The Company manufactures and distributes three product categories: mobility and seating, lifestyle and respiratory therapy. It provides medical device solutions for congenital (cerebral palsy, muscular dystrophy and spina bifida), acquired (stroke, spinal cord injury, traumatic brain injury, post-acute recovery and pressure ulcers) and degenerative (amyotrophic lateral sclerosis, multiple sclerosis, chronic obstructive pulmonary disease (COPD), elderly and bariatric) ailments. The Company sells its products to home medical equipment providers with retail and e-commerce channels, residential living operators, distributors and government health services.
