Turning Point Brands Announces Pricing of Upsized Private Offering of $150 Million of 2.50% Convertible Senior Notes Due 2024

Turning Point Brands, Inc. (the "Companya??) (NYSE: TPB), a leading provider of other tobacco products and adult consumer alternatives, announced the pricing of $150.0 in million aggregate principal amount of convertible senior notes due 2024 (the "Notesa??) in a previously announced private offering (the "Offeringa??) to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Acta??). In addition, the Company has granted the initial purchasers of the Notes a 13-day option to purchase up to an additional $22.5 million in aggregate principal amount of Notes. The $150.0 million in aggregate principal amount of Notes represented an increase of $25.0 million from the original offering size of $125.0 million in aggregate principal amount. The sale of the Notes to the initial purchasers is expected to settle on July 30, 2019, subject to customary closing conditions, and is expected to result in approximately $144.75 million in net proceeds to the Company after deducting the initial purchasersa?? discount and estimated offering expenses payable by the Company (assuming no exercise of the initial purchasersa?? option to purchase additional Notes).

The Notes will be senior unsecured obligations of the Company and will accrue interest at a rate of 2.50% per year, payable semi-annually in arrears, beginning on January 15, 2020. The Notes will mature on July 15, 2024, unless earlier redeemed, repurchased or converted. The Company may not redeem the Notes prior to July 15, 2022, after which it may redeem the Notes if certain conditions are met. Holders of the Notes will have the right to require the Company to repurchase all or a portion of their Notes upon the occurrence of a fundamental change (as defined in the indenture governing the Notes) at a purchase price of 100% of their principal amount plus any accrued and unpaid interest.

The initial conversion rate for the Notes is 18.5670 shares of the Companya??s voting common stock, par value $0.01 per share (the "common stocka??), per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $53.86 per share, which represents a conversion premium of approximately 30% to the last reported sale price of the common stock on the New York Stock Exchange on July 25, 2019). Prior to the close of business on the business day immediately preceding January 15, 2024, the Notes will be convertible at the option of the holders of the Notes only upon the satisfaction of specified conditions and during certain periods. Thereafter until the close of business on the second scheduled trading day preceding the maturity date, the Notes will be convertible at the option of the holders of Notes at any time regardless of these conditions. Conversions of the Notes will be settled in cash, shares of the common stock or a combination thereof, at the Companya??s election.

In connection with the pricing of the Notes, the Company entered into capped call transactions with certain financial institutions (the "Option Counterpartiesa??). The capped call transactions are expected generally to reduce or offset the potential dilution to the common stock upon any conversion of Notes with such reduction and/or offset subject to a cap based on the cap price. The cap price of the capped call transactions will initially be approximately $82.86 per share, which represents a premium of approximately 100.0% over the last reported sale price of the common stock of $41.43 per share on July 25, 2019, and is subject to certain adjustments under the terms of the capped call transactions. If the initial purchasers of the Offering exercise their option to purchase additional Notes, the Company expects to enter into additional capped call transactions with the Option Counterparties.
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