Funding Neuro Public Offering

Nevro raising more than $300m through public offering, convertible senior notes

Nevro (NYSE:NVRO) announced today that it priced concurrent underwritten public offerings of more than 1.6 million common stock shares, as well as convertible senior notes, to raise more than $300 million.

The offering of 1,625,000 total shares of common stock at a price of $84.00 per share is slated to bring gross proceeds of approximately $136.5 million before the necessary deductions. For the concurrent $165 million senior notes offering, the company is including 2.75% convertible senior notes due in 2025.

Redwood City, Calif.-based Nevro granted the underwriters of the offerings a 30-day option to purchase an additonal 243,750 shares of common stock at the public offering price and $24.75 million aggregate amounts in notes. All shares of common stock are set to be offered by the company itself, with the offerings expected to close on April 6.

Interest on the senior notes will run at a rate of 2.75% per year, payable semi-annually in arrears on April 1 and Oct. 1 of each year, beginning on Oct. 1, 2020. The notes are set to mature on April 1, 2025, unless earlier repurchased or converted. Nevro is not able to redeem the notes and no sinking fund is provided.

In connection with the pricing, Nevro entered into privately negotiated convertible note hedge transactions with one or more of the underwriters and/or their affiliates and/or other institutions. The transactions are set to cover the number of shares of Nevro’s common stock that will initially underlie the notes and are expected to reduce the potential equity dilution and/or offset cash payments in excess of the principal amount due.

The neurostimulation company also entered into privately negotiated warrant transactions at a higher strike price, initially set at $147 per share, which represents a premium of about 75% over the public offering price.

According to a news release, Nevro plans to use a portion of the proceeds from the offerings to pay the cost of the convertible note hedge transactions, with the remainder earmarked for general corporate purposes, including repaying its 1.75% convertible senior notes due in 2021 at maturity.

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