Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
On August 22, 2022, Assertio
Holdings, Inc., a Delaware corporation (the “Company”) offered and
agreed to issue and sell $60 million aggregate principal amount of its 6.50% Convertible Senior Notes due 2027 (the “Initial
Notes”) to SVB Securities LLC as initial purchaser (the “Initial
Purchaser”). In addition, the Company granted the Initial Purchaser in the offering an option to purchase, within a
13-day period beginning on, and including, the date on which the Initial Notes are issued, up to an additional $10 million aggregate
principal amount of the 6.50% Senior Convertible Notes due 2027 on the same terms and conditions (the “Optional
Notes,” and, together with the Initial Notes, the “Notes”),
which was exercised in full on August 24, 2022.
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 of 1933, as amended
(the “Securities Act”), and for resale by the Initial Purchaser to persons reasonably believed to be qualified institutional
buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act. The Company relied on these exemptions
from registration based in part on representations made by the Initial Purchaser in the Purchase Agreement dated as of August 22,
2022, by and between the Company and the Initial Purchaser. The shares of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”), issuable upon conversion of the Notes, if any, have not been registered under the Securities
Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
The Company retained Lake Street Capital Markets, LLC as financial advisor in connection with the offering.
To the extent that any shares of Common Stock are
issued upon conversion of the Notes, they will be issued in transactions anticipated to be exempt from registration under the Securities
Act by virtue of Section 3(a)(9) thereof because no commission or other remuneration is expected to be paid in connection with
conversion of the Notes and any resulting issuance of shares of Common Stock.
Convertible Notes and the Indenture
The Company issued the Notes pursuant to an
Indenture, dated August 25, 2022 (the “Indenture”), among the
Company and U.S. Bank Trust Company, National Association, as trustee. The Notes are senior unsecured obligations of the Company.
The Indenture includes customary covenants and sets forth certain events of default after which the Notes may be declared
immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company or its
significant subsidiaries after which the Notes become automatically due and payable. The Company has agreed not to incur liens on
its or its subsidiaries’ assets or to permit its subsidiaries to guarantee indebtedness without equally and ratably securing
or guaranteeing the notes, and agreed not to permit its subsidiaries to issue disqualified or preferred stock, subject to certain
exceptions set forth in the Indenture.
The Notes will mature on September 1, 2027,
unless earlier redeemed, repurchased or converted. The Notes will bear interest from August 25, 2022 at a rate of 6.50% per year
payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 1, 2023.
The Notes will be convertible at the option of
the noteholders at any time prior to the close of business on the business day immediately preceding the maturity date.
Upon conversion, the Company may satisfy its conversion
obligation by paying and/or delivering, as the case may be, cash, shares of Common Stock or a combination of cash and shares of Common
Stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the Indenture. The conversion
rate for the Notes will initially be 244.2003 shares of Common Stock per $1,000 principal amount of Notes, which is equivalent to an initial
conversion price of approximately $4.09 per share of Common Stock. The initial conversion price of the Notes represents a premium of approximately
12.50% to the $3.64 per share closing price of the Company’s Common Stock on The Nasdaq Capital Market on August 22, 2022.
The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture.
The Company may not redeem the Notes prior to
September 8, 2025. The Company may redeem for cash all or any portion of the Notes, at its option, on or after
September 8, 2025, if the last reported sale price of the Company’s Common Stock has been at least 130% of the conversion
price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period
(including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which
the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed,
plus any accrued and unpaid interest to, but excluding, the redemption date. No “sinking fund” is provided for the
Notes, which means that the Company is not required to redeem or retire the Notes periodically.
A copy of the Indenture (including the form of
the Note) is attached as an exhibit to this report and is incorporated herein by reference (and this description is qualified in its entirety
by reference to such document).
The net proceeds from the offering, including
the sale of the Optional Notes, were approximately $65.9 million, after deducting the Initial Purchaser’s discounts and commissions
and the Company’s estimated offering expenses. The Company intends to use the net proceeds from the offering to repurchase or redeem
its 13% Senior Secured Notes due 2024 and for general corporate purposes. The redemption date for the 13% Senior Secured Notes due 2024 is September 22, 2022.
As a result of the issuance of the Notes, the Company
has determined to suspend use of its previously established “at-the-market” offering program.