Invacare 2015 Annual Report Download - page 123

INVACARE CORPORATION AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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• the amendment of the negative covenant regarding capital expenditures to increase the aggregate amount of permitted
expenditures from $20,000,000 to $35,000,000;
• the amendment of the negative covenant regarding investments to permit certain qualifying acquisitions for total aggregate
consideration of up to $30,000,000;
• the amendment of the negative covenant regarding sales of assets to increase the aggregate amount of permitted dispositions
from $20,000,000 to $25,000,000 (calculated as of the date of the Credit Agreement Amendment), so long as the company
is not, and would not after giving pro-forma effect to any such disposition be, in default under the Credit Agreement and
has had undrawn availability equal to at least 20% of the maximum revolving advance amount under its North American-
based credit facility (which maximum amount is currently $100,000,000) for the 30 consecutive days ending as of the
date of the most recent North American borrowing base certificate delivered by the company under the Credit Agreement;
and
• the amendment of the availability block (which affects the company’s borrowing base) by reducing the block from
$10,000,000 to $5,000,000, the effect of which is to increase borrowing capacity.
Also on February 16, 2016, the company executed a release, acknowledged by Wells Fargo Bank, N.A., as trustee, effecting
the release as guarantors of all of the company’s subsidiaries that were guarantors of the company’s 4.125% Convertible Senior
Subordinated Debentures due 2027, issued pursuant to the terms of the indenture, dated as of February 12, 2007, between the
company and the trustee. See “Supplemental Guarantor Information”.
On February 23, 2016, the company issued $130,000,000 aggregate principal amount of 5.00% convertible senior notes due
2021 (the “notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. In connection
with the offering, the company granted the initial purchasers an option to purchase (solely to cover over-allotments, if any) up to
an additional $20,000,000 aggregate principal amount of notes, for which notice of exercise shall be delivered to the company
within a 13-day period beginning on, and including, the date the Company first issues the notes.
The notes bear interest at a rate of 5.00% per year payable semi-annually in arrears on February 15 and August 15 of each
year, beginning August 15, 2016. The notes will mature on February 15, 2021, unless repurchased or converted in accordance with
their terms prior to such date. Prior to August 15, 2020, the notes will be convertible only upon satisfaction of certain conditions
and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately
preceding the maturity date. Unless and until the company obtains shareholder approval under applicable New York Stock Exchange
rules, the notes will be convertible, subject to certain conditions, into cash. If the company obtains such shareholder approval, the
notes may be settled in cash, the company’s common shares or a combination of cash and the company’s common shares, at the
company’s election. Holders of the notes will have the right to require the company to repurchase all or some of their notes at
100% of their principal, plus any accrued and unpaid interest, upon the occurrence of certain fundamental changes. The conversion
rate will initially be 60.0492 common shares per $1,000 principal amount of notes (equivalent to an initial conversion price of
approximately $16.65 per common share).
In connection with the offering of the notes, the company entered into privately negotiated convertible note hedge transactions
with two financial institutions (the “option counterparties”). These transactions cover, subject to customary anti-dilution
adjustments, the number of the company’s common shares that will initially underlie the notes, and are expected generally to
reduce the potential equity dilution, and/or offset any cash payments in excess of the principal amount due, as the case may be,
upon conversion of the notes. The company entered into separate, privately negotiated warrant transactions with the option
counterparties at a higher strike price relating to the same number of the company’s common shares, subject to customary anti-
dilution adjustments, pursuant to which the company will sell warrants to the option counterparties. The warrants could have a
dilutive effect on the company’s outstanding common shares and the company’s earnings per share to the extent that the price of
the company’s common shares exceeds the strike price of those warrants. The strike price of the warrants will initially be $22.4175
per share and is subject to certain adjustments under the terms of the warrant transactions.
The net proceeds from the offering were approximately $124,800,000, after deducting fees and estimated offering expenses
payable by the company and excluding the option by the purchasers to purchase an additional $20,000,000 aggregate principal
amount of notes. Approximately $5,000,000 of the net proceeds from the offering were used to repurchase the company’s common
shares from purchases of notes in the offering in privately negotiated transactions. A portion of the net proceeds from the offering
were used to pay the cost of the convertible note hedge transactions (after such cost is partially offset by the proceeds to the
company from the sale of the warrant transactions), which net cost was $13,520,000. The company intends to use the remaining
net proceeds from the offering for working capital and general corporate purposes, which may include funding portions of the