ITASCA, Ill.--(BUSINESS WIRE)--Apr. 27, 2016--
Knowles Corporation (NYSE: KN) today announced its intention to offer,
subject to market conditions and other factors, $125 million aggregate
principal amount of convertible senior notes due 2021 (the “notes”) in a
private placement to qualified institutional buyers pursuant to Rule
144A under the Securities Act of 1933, as amended (the “Act”). Knowles
also expects to grant the initial purchasers of the notes a 30-day
option to purchase up to an additional $18.75 million aggregate
principal amount of the notes. J.P. Morgan is acting as sole
book-running manager and BofA Merrill Lynch is acting as joint lead
manager for the offering.
The notes will be unsecured, senior obligations of Knowles and interest
will be payable semi-annually in arrears. The notes will be convertible
into cash, shares of Knowles’ common stock or a combination thereof, at
Knowles’ election. The interest rate, conversion rate and other terms of
the notes are to be determined upon pricing of the offering.
Knowles expects to use a portion of the net proceeds of the offering of
the notes to pay the cost of the convertible note hedge transactions
described below (after such cost is partially offset by the proceeds to
Knowles from the warrant transactions described below) and to use the
remaining proceeds of the offering to reduce borrowings outstanding
under Knowles’ term loan facility.
“This is an opportunistic financing for Knowles timed to take advantage
of an attractive market backdrop,” said Jeffrey Niew, president & CEO of
Knowles. “We expect that this placement of notes will significantly
extend our current debt maturity profile and increase our operational
flexibility.”
In connection with the pricing of the notes, Knowles expects to enter
into privately negotiated convertible note hedge transactions with one
or more of the initial purchasers or their respective affiliates (the
"option counterparties"). Knowles also expects to enter into warrant
transactions with the option counterparties. The convertible note hedge
transactions are expected generally to reduce the potential dilution to
Knowles’ common stock upon any conversion of the notes and/or offset any
cash payments Knowles is required to make in excess of the principal
amount of converted notes, as the case may be, in the event that the
market price per share of Knowles’ common stock is greater than the
strike price of those convertible note hedge transactions. However, the
warrant transactions could separately have a dilutive effect to the
extent that the market price per share of Knowles’ common stock exceeds
the strike price of the warrants. If the initial purchasers exercise
their option to purchase additional notes, Knowles expects to enter into
additional privately negotiated convertible note hedge transactions and
additional warrant transactions with the option counterparties.
In connection with establishing their initial hedges of the convertible
note hedge and warrant transactions, Knowles has been advised that the
option counterparties or their respective affiliates expect to enter
into various derivative transactions with respect to Knowles’ common
stock concurrently with or shortly after the pricing of the notes. This
activity could increase (or reduce the size of any decrease in) the
market price of Knowles' common stock or the notes at that time, and
could result in a higher effective conversion price for the notes. In
addition, Knowles has been advised that the option counterparties or
their respective affiliates may modify their hedge positions by entering
into or unwinding derivatives with respect to Knowles’ common stock
and/or by purchasing or selling shares of Knowles’ common stock or other
securities of Knowles in secondary market transactions following the
pricing of the notes and prior to the maturity of the notes (and are
likely to do so during any observation period relating to a conversion
of the notes). This activity could also cause or avoid an increase or a
decrease in the market price of Knowles’ common stock or the notes,
which could affect the ability of noteholders to convert the notes and,
to the extent the activity occurs during any observation period related
to a conversion of the notes, it could affect the number of shares and
value of the consideration that noteholders will receive upon conversion
of the notes. The convertible note hedge transactions and warrant
transactions have not been, and will not be, registered under the Act or
the securities laws of any other jurisdiction and, unless so registered,
may not be offered or sold in the United States except pursuant to an
exemption from such registration requirements.
The notes will be offered to qualified institutional buyers pursuant to
Rule 144A under the Act. Neither the notes nor the shares of common
stock issuable upon conversion of the notes, if any, have been, nor will
be, registered under the Act or the securities laws of any other
jurisdiction, and unless so registered, may not be offered or sold in
the United States except pursuant to an exemption from such registration
requirements.
This announcement is neither an offer to sell nor a solicitation of an
offer to buy any of these securities and shall not constitute an offer,
solicitation, or sale in any jurisdiction in which such offer,
solicitation, or sale is unlawful.
Forward Looking Statements
This announcement contains forward-looking statements within the meaning
of the safe harbor provisions of the United States Private Securities
Litigation Reform Act of 1995. The words “expect,” “anticipate,”
“intend,” “could,” “may,” “will” and similar expressions, among others,
generally identify forward-looking statements, which speak only as of
the date the statements were made. These forward-looking statements
include statements relating to, among other things, the proposed
offering of the notes, the anticipated terms of the notes and the
convertible note hedge and warrant transactions, the expected use of the
net proceeds from these transactions and the anticipated effects of the
offering. These statements involve risks and uncertainties that may
cause results to differ materially from the statements made herein,
including those identified in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2015, subsequent Reports on Forms 10-Q
and 8-K and our other filings we make with the Securities and Exchange
Commission. Knowles disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by law.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160427006707/en/
Source: Knowles Corporation
Knowles Corporation
Media Contact:
Roxanne Pipitone
Knowles
Communications
Phone: (630) 238-5257
Email: roxanne.pipitone@knowles.com
or
Investors
Contact:
Mike Knapp
Knowles Investor Relations
Phone:
(630) 238-5236
Email: mike.knapp@knowles.com