ArthroCare today announced that it has entered into an agreement with One Equity Partners (OEP), the global private equity investment arm of JPMorgan Chase & Co., whereby OEP will purchase $75 million of newly-issued ArthroCare Series A Convertible Preferred Stock. ArthroCare intends to use the proceeds to repay the Company’s existing Credit Agreement and expects to use the remaining portion for general corporate purposes.
David Fitzgerald, ArthroCare’s Acting President and Chief Executive Officer, said, “We are pleased to have the support of a prestigious investor such as One Equity Partners. This investment attests to the strength of our underlying business. This financing will provide ArthroCare with the resources to repay our debt and also give us additional financial flexibility to continue pursuing our plans. We look forward to working with One Equity Partners to create long-term shareholder value.”
Dick Cashin, Managing Partner of One Equity Partners, said, “We are excited to be partnering with ArthroCare, a leader and innovator in the medical device industry with a strong product portfolio. We are impressed by the strength of ArthroCare’s management team and product portfolio, and we look forward to supporting the Company in its next phase of growth.”
Under the terms of the agreement, OEP will purchase $75 million of newly-issued ArthroCare Series A Convertible Preferred Stock, which will be convertible into shares of ArthroCare common stock at $15.00 per share, a premium over the closing price of the Company’s common stock on August 14, 2009 and the 30-day trading average. In connection with its investment, Chris Ahrens and Greg Belinfanti, both Partners of OEP will join ArthroCare’s Board of Directors. Cumulative dividends on the ArthroCare preferred stock will be payable-in-kind at an annual rate of 3.0% for five years after the preferred stock is issued. ArthroCare continues to use its best efforts to become current in its periodic reporting with the Securities and Exchange Commission (SEC) and has agreed, thereafter, to file with the SEC a registration statement on Form S-1 to register the resale of the common stock underlying the newly-issued securities. Additional information regarding the OEP investment is included in the current report on Form 8-K that ArthroCare is filing with the SEC.