SonoSite Closes $200 Million Offering of Convertible Senior Notes
17 July 2007 - 7:23AM
Business Wire
SonoSite, Inc., (Nasdaq:SONO), the world leader in hand-carried
ultrasound, today announced the closing of its offering of $200
million aggregate principal amount of Convertible Senior Notes due
2014 in an offering registered under the Securities Act of 1933 as
amended (the �Securities Act�). The notes will pay interest
semiannually at a rate of 3.75% per annum. In certain
circumstances, the notes will be convertible based on an initial
conversion rate of 26.1792 shares of common stock per $1,000
principal amount of notes, which is equivalent to an initial
conversion price of approximately $38.20 per share. Conversions
will be settled in cash up to the principal amount of the notes,
with any conversion value above the principal amount settled in
shares of SonoSite's common stock. Holders of the notes may require
SonoSite to repurchase the notes for cash equal to 100% of the
principal amount to be repurchased plus accrued and unpaid interest
upon the occurrence of a fundamental change. SonoSite has granted
the underwriters a 30-day option to purchase up to $25 million in
aggregate principal amount of additional notes to cover
over-allotments. SonoSite intends to use the net proceeds from this
offering (remaining after the cost of the convertible note hedge
and warrant transactions described below) to fund acquisitions from
time-to-time of one or more complementary businesses or product
lines. To the extent the net proceeds are not used for
acquisitions, they will be used for general corporate purposes,
which may include repayment of debt, capital expenditures,
investments in its subsidiaries or as additions to working capital.
Net proceeds may be temporarily invested prior to use. In
connection with the offering, SonoSite used a portion of the
proceeds of the offering to enter into a convertible note hedge
transaction and a warrant transaction with an affiliate of one of
the underwriters (the "Option Counterparty"), which will cover
approximately 48% of any notes converted (assuming no
over-allotment), and are intended to reduce the potential dilution
to SonoSite's common stockholders upon any such conversion by
effectively increasing the conversion price for these notes to
approximately $46.97 per share of SonoSite�s common stock,
representing a 50% premium relative to the last reported sale price
on July 10, 2007 of $31.31 per share. The cost of the convertible
note hedge transaction was partially offset by proceeds received
from the warrant transaction. In connection with establishing its
initial hedge of these transactions, the Option Counterparty or its
affiliates expect to enter into various derivative transactions
with respect to SonoSite's common stock concurrently with or
shortly after the pricing of the notes, and may enter into or
unwind various derivative transactions with respect to SonoSite's
common stock and/or purchase or sell SonoSite's common stock in
secondary market transactions following the pricing of the notes
(and are likely to do so during any observation period related to a
conversion of notes). These activities could have the effect of
increasing or preventing a decline in the price of SonoSite's
common stock concurrently with or shortly after the pricing of the
notes. In addition, the Option Counterparty or its affiliates may
modify its hedge position following the pricing of the notes from
time to time by entering into or unwinding various derivative
transactions and/or by purchasing or selling SonoSite's common
stock in secondary market transactions. These activities could
adversely affect the price of SonoSite's common stock and the value
of the notes and, as a result, the settlement amount payable upon
conversion of the notes. SonoSite estimates that the net proceeds
from the offering, assuming no exercise of the underwriters�
over-allotment option will be approximately $193.5 million, after
deducting discounts, commissions and estimated expenses. In
addition, SonoSite used a portion of the combined net proceeds of
the offering and proceeds of $19.5 million from the sale of
warrants to fund the $28.6 million cost of the convertible note
hedge transactions. JPMorgan was the sole book running manager for
the offering and Piper Jaffray and Savvian served as co-managers
for the offering. This press release is neither an offer to sell or
a solicitation of an offer to buy the notes nor shall there be any
sale of the notes in any state or jurisdiction in which such an
offer, solicitation or sale would be unlawful prior to the
registration or qualification thereof under the securities laws of
any such state or jurisdiction. About SonoSite SonoSite, Inc.
(www.sonosite.com) is the innovator and world leader in
hand-carried ultrasound. Headquartered near Seattle, the company is
represented by eight subsidiaries and a global distribution network
in over 90 countries. SonoSite�s small, lightweight systems are
expanding the use of ultrasound across the clinical spectrum by
cost-effectively bringing high performance ultrasound to the point
of patient care. The company employs over 550 people worldwide.
Forward Looking Information and the Private Litigation Reform Act
of 1995 Certain statements in this press release relating to our
convertible note financing, hedging transactions we entered into in
connection our convertible note financing, our expected use of
proceeds from the proposed financing and our acquisition strategy
are 'forward-looking statements' for the purposes of the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are based on the opinions
and estimates of our management at the time the statements are made
and are subject to risks and uncertainties that could cause actual
results to differ materially from those expected or implied by the
forward-looking statements. These statements are not guaranties of
future performance and are subject to known and unknown risks and
uncertainties and are based on potentially inaccurate assumptions.
Factors that could affect actual results include the risk that the
hedging transaction described in this release has an adverse effect
on the trading price of our common stock and the risk that we are
unable to successfully execute our acquisition strategy, as well as
other factors contained in the Item 1A. 'Risk Factors' section of
our Annual Report on Form 10-K for the year ended December 31, 2006
filed with the Securities and Exchange Commission. We caution
readers not to place undue reliance upon these forward-looking
statements that speak only as to the date of this release. We
undertake no obligation to publicly revise any forward-looking
statements to reflect new information, events or circumstances
after the date of this release or to reflect the occurrence of
unanticipated events.
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