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News & Press: Company News

K2M Group Announce $50 Million Private Offering

Wednesday, August 10, 2016  
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K2M Group Holdings, Inc has priced a $50 million private offering of senior convertible Notes. The offering is expected to close on August 11, 2016, subject to customary closing conditions.

The Notes will pay interest semi-annually in cash on February 15 and August 15 at a rate of 4.125% per year, commencing February 15, 2017. The Notes will mature on August 15, 2036. Prior to February 15, 2036, the Notes will be convertible only upon the occurrence of certain events and during certain periods and, thereafter, at any time until the second scheduled trading day immediately preceding the maturity date of the Notes.

K2M estimates that the net proceeds from the offering of Notes will be approximately $47.0 million, after deducting the initial purchaser's discount and the estimated offering expenses payable by K2M. K2M expects to use the net proceeds of this offering to repay approximately $19.5 million of borrowings under its revolving credit facility and the remaining net proceeds for general corporate purposes, which may include working capital and purchasing inventory.

K2M, which specializes in spinal repair-related technology, has more than 500 approved and pending patents for products that help surgeons attach steel rods or insert implants into vertebrae using minimally invasive techniques. This spring, the company received FDA approval to use a 3-D printer to make its newest implants for surgery. The company also completed a move to its new 150,000-square-foot headquarters in Leesburg. The $28 million, two-building complex includes an innovation building where the company has product development, a new demonstration room and additional space for engineering.

As with most investments, the advances have come at a price. K2M said it has incurred significant operating expenses since its inception in 2004 and expects losses to continue in the near future as it expands its product portfolio, including the new 3-D printed devices, and into new and existing markets.

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