~ Strategic transaction to meaningfully reduce interest expense ~
~ Immediately earnings accretive in 2023 ~
PLANO, Texas, Feb. 03, 2023 (GLOBE NEWSWIRE) — Integer Holdings Corporation (NYSE: ITGR) (the “Company”), a leading medical device outsource manufacturer, announces the closing of its offering of $500 million aggregate principal amount of 2.125% convertible senior notes due 2028 (the “Notes”). In response to strong investor demand at attractive terms, the Company upsized the initial offering of $375 million aggregate principal amount of the Notes to $435 million and the initial purchasers fully exercised their option to purchase an additional $65 million aggregate principal amount of the Notes.
“We benefited from a primarily floating-rate debt structure while interest rates were historically low, and now our strong performance has enabled us to use these convertible notes to strategically replace nearly half of our floating-rate debt with a fixed-rate lower cash coupon,” said Joe Dziedzic, president and CEO. “As a testament to the confidence investors have in our strategy and financial strength, demand reached multiple times our initial offering size and we achieved very attractive terms.”
“This transaction is immediately earnings accretive in 2023, driven by lower annualized total interest expense of approximately $15 million, based on today’s outstanding debt and current interest rates,” said Jason Garland, executive vice president and CFO. “We accomplished our strategic objective of meaningfully lowering interest expense with this transaction. This allows more of our expected 7% to 9% revenue growth and margin expansion in 2023 to increase earnings, with minimal leverage impact and no immediate dilution. In addition, the structure of the Notes and the associated capped calls also protect investors by mitigating potential dilution in the future.”
Proceeds from the transaction were used to fully repay borrowings and interest due under the Company’s “term B” loan (the “TLB Facility”), to pay related fees and expenses, and to pay costs associated with the related capped call transactions. The Company intends to use the remainder of the net proceeds to repay outstanding borrowings under the Company’s revolving credit facility.
With a five-year term, the maturity of the Notes approximates the original 2028 maturity of the TLB Facility. Upon conversion, the principal amount of the Notes will be paid in cash in lieu of shares, significantly reducing potential dilution. As a result of the related capped call transactions, dilution upon a conversion of the Notes will be mitigated by the increased effective conversion price of the Notes to approximately $108.59, a premium of 65% over the closing sale price of the Company’s common stock of $65.81 per share on January 31, 2023. The Company will have the option to further minimize dilution in the future by electing to deliver the value of any conversion obligation owed in excess of the principal amount of the Notes in cash, or a combination of cash and shares.
About Integer®
Integer Holdings Corporation (NYSE: ITGR) is one of the largest medical device outsource (MDO) manufacturers in the world serving the cardiac, neuromodulation, vascular, portable medical and orthopedics markets. The Company provides innovative, high-quality medical technologies that enhance the lives of patients worldwide. In addition, the Company develops batteries for high-end niche applications in energy, military, and environmental markets. The Company’s brands include Greatbatch Medical®, Lake Region Medical® and Electrochem®. Additional information is available at www.integer.net.
Forward-Looking Statements
Some of the statements contained in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended.
You can identify forward-looking statements by terminology such as “outlook,” “projected,” “may,” “will,” “should,” “could,” “expect,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “project,” or “continue” or variations or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially from those stated or implied by these forward-looking statements. In evaluating these statements and the Company’s prospects, you should carefully consider the factors set forth below.
Although it is not possible to create a comprehensive list of all factors that may cause actual results to differ from the results expressed or implied by such forward-looking statements or that may affect the Company’s future results, some of these factors and other risks and uncertainties that arise from time to time are described in Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K and in its other periodic filings with the SEC and include the following:
- operational risks, such as the duration, scope and impact of global supply chain issues, the military conflict between Russia and Ukraine, and the COVID-19 pandemic, including the evolving health, economic, social and governmental environments and the effect of the pandemic on the Company’s associates, suppliers and customers as well as the global economy; its dependence upon a limited number of customers; pricing pressures that the Company faces from customers; its reliance on third party suppliers for raw materials, key products and subcomponents; the competitive labor market and its ability to attract, train and retain a sufficient number of qualified associates; the potential for harm to its reputation caused by quality problems related to its products; the dependence of its energy market-related revenues on the conditions in the oil and natural gas industry; interruptions in its manufacturing operations; its dependence upon its information technology systems and its ability to prevent cyber-attacks and other failures; and its dependence upon its senior management team and technical personnel;
- strategic risks, such as the intense competition the Company faces and its ability to successfully market its products; its ability to respond to changes in technology; its ability to develop new products and expand into new geographic and product markets; and its ability to successfully identify, make and integrate acquisitions to expand and develop its business in accordance with expectations;
- financial risks, such as the Company’s significant amount of outstanding indebtedness and its ability to remain in compliance with financial and other covenants under its senior secured credit facilities; economic and credit market uncertainties that could interrupt its access to capital markets, borrowings or financial transactions; financial and market risks related to its international operations and sales; its complex international tax profile; and its ability to realize the full value of its intangible assets; and
- legal and compliance risks, such as regulatory issues resulting from product complaints, recalls or regulatory audits; the potential of becoming subject to product liability or intellectual property claims; the Company’s ability to protect its intellectual property and proprietary rights; its ability and the cost to comply with environmental regulations; its ability to comply with customer-driven policies and third party standards or certification requirements; its ability to obtain necessary licenses for new technologies; legal and regulatory risks from its international operations; and the fact that the healthcare industry is highly regulated and subject to various regulatory changes.
Except as may be required by law, the Company assumes no obligation to update forward-looking statements in this press release whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise.
Contact Information
Tony Borowicz
Senior Vice President, Investor Relations
716.759.5809
tony.borowicz@integer.net
