Exhibit 99.1
VAREX
PRICES OFFERING OF $175 MILLION
4.00%
CONVERTIBLE SENIOR NOTES DUE 2025
SALT
LAKE CITY, June 5, 2020 – Varex Imaging, Corp. (Nasdaq: VREX) today announced the pricing
of its offering of $175.0 million aggregate principal amount of its 4.00% Convertible Senior Notes due 2025 (the “notes”)
in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. In
connection with the offering, Varex granted the initial purchasers a 13-day option to purchase, for settlement within a period
of 13 days from, and including, the date notes are first issued, up to an additional $25.0 million aggregate principal amount
of notes. The offering is expected to close on June 9, 2020, subject to customary closing conditions.
In connection
with the offering of the notes, Varex has entered into convertible note hedge and warrant transactions, with one or more financial
institutions, including certain of the initial purchasers or their affiliates (the “hedge counterparties”), that are
designed to offset the effect of dilution from the conversion of the notes up to an approximately 50% premium to today’s
closing price.
Varex
estimates that the net proceeds from the offering will be $169.0 million (or $193.3 million if the initial purchasers exercise
their option to purchase additional notes in full), after deducting the initial purchasers’ discounts and commissions and
estimated offering expenses. Varex intends to use the net proceeds from the offering of the notes to
fund the net cost of entering into the convertible note hedge transactions (after such cost is partially offset by the proceeds
Varex receives from entering into the warrant transactions) and $75.0 million to partially repay indebtedness under Varex’s
credit agreement. Varex intends to use the remainder of the net proceeds for general corporate purposes. If the initial purchasers
exercise their option to purchase additional notes, Varex intends to use a portion of the additional net proceeds to fund the
cost of entering into additional convertible note hedge transactions (after such cost is partially offset by the proceeds that
Varex receives from entering into the additional warrant transactions).
The
notes will be senior unsecured obligations of Varex and will accrue interest at a rate of 4.00% per annum, payable semi-annually
in arrears on June 1 and December 1 of each year, beginning on December 1, 2020. The notes will mature on June 1, 2025, unless
earlier converted, redeemed, or repurchased. The notes will not be redeemable prior to June 1, 2023. Varex may redeem all or any
portion of the notes, at Varex’s option, on or after June 1, 2023 and on or before the 60th scheduled trading day immediately
prior to the maturity date, at a cash redemption price equal to the principal amount of the notes to be redeemed, plus accrued
and unpaid interest, if any, but only if the last reported sale price of Varex’s common stock exceeds 130% of the conversion
price on (1) each of at least 20 trading days (whether or not consecutive), during the 30 consecutive trading days ending on,
and including, the trading day immediately before the date Varex sends the related redemption notice; and (2) the trading day
immediately preceding the date on which Varex provides such redemption notice.
1678
S. Pioneer Road | Salt Lake City, UT 84104 | 801.972.5000
The
notes will be convertible at the option of the holders into cash, shares of Varex’s common stock or a combination of cash
and shares of Varex’s common stock, at Varex’s election, at an initial conversion rate of 48.048 shares of Varex’s
common stock per $1,000 principal amount of the notes, which is equivalent to an initial conversion price of approximately $20.81
per share of Varex’s common stock. The initial conversion price of the notes represents a premium of approximately 25% over
the $16.65 closing price of Varex’s common stock on June 4, 2020.
Prior
to December 1, 2024, the notes will be convertible at the option
of the holders only upon the satisfaction of certain conditions and during certain periods. On and after December 1, 2024, until
the close of business on the second scheduled trading day immediately preceding the maturity date, the notes will be convertible
at the option of the holders at any time regardless of these conditions. If Varex undergoes a fundamental change (as defined in
the indenture governing the notes), holders may require Varex to repurchase for cash all or any portion of their notes at a repurchase
price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding,
the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date
or if Varex delivers a notice of redemption, Varex will increase, in certain circumstances, the conversion rate for a holder who
elects to convert its notes in connection with such a corporate event or notice of redemption, as the case may be.
In connection
with establishing their initial hedge positions with respect to the convertible note hedge and warrant transactions, Varex expects
that the hedge counterparties or their respective affiliates will enter into various cash-settled, over-the-counter derivative
transactions with respect to Varex’s common stock concurrently with, or shortly after, or purchase shares of Varex’s
common stock concurrently with, or shortly after, the pricing of the notes and may unwind these cash-settled over-the-counter
derivative transactions and purchase shares of Varex’s common stock in open market transactions shortly after the pricing
of the notes. These activities could increase, or prevent a decline in, the market price of Varex’s common stock concurrently
with, or shortly after, the pricing of the notes.
In addition,
Varex expects that the hedge counterparties or their respective affiliates will modify their hedge positions with respect to the
convertible note hedge and warrant transactions from time to time after the pricing of the notes, and are likely to do so during
any observation period for the notes, by purchasing or selling shares of Varex’s common stock or the notes in privately
negotiated transactions or open market transactions or by entering into or unwinding various derivative transactions with respect
to Varex’s common stock. Any of these activities could adversely affect the market price of Varex’s common stock and,
consequently, the value of the consideration that holders of the notes receive upon conversion of the notes, the trading price
of the notes or the holder’s ability to convert the notes.
The notes
and any shares of Varex’s common stock issuable upon conversion of the notes will be offered to qualified institutional
buyers pursuant to Rule 144A under the Securities Act. The offer and sale of the notes and any shares of Varex’s common
stock potentially issuable upon conversion of the notes will not be registered under the Securities Act of 1933, as amended, or
the securities laws of any other jurisdiction. Neither the notes nor the shares of Varex’s common stock potentially issuable
upon conversion of the notes may be offered or sold in the United States absent registration or an applicable exemption from the
registration requirements of the Securities Act.
1678
S. Pioneer Road | Salt Lake City, UT 84104 | 801.972.5000
No Offer
or Solicitation
This
press release does not constitute an offer to sell, nor is it a solicitation of an offer to buy, these securities, nor shall there
be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any state or any jurisdiction.
About
Varex
Varex Imaging
Corporation is a leading innovator, designer and manufacturer of X-ray imaging components, which include X-ray tubes, digital
detectors and other image processing solutions that are key components of X-ray imaging systems. With a 70+ year history of successful
innovation, Varex’s products are used in medical imaging as well as in industrial and security imaging applications. Global
OEM manufacturers incorporate the company’s X-ray sources, digital detectors, connecting devices and imaging software in
their systems to detect, diagnose, protect and inspect. Headquartered in Salt Lake City, Utah, Varex employs approximately 2,000
people located at manufacturing and service center sites in North America, Europe, and Asia.
Forward
Looking Statements
This news
release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. Statements concerning unaudited financial results; industry or market outlook; customer demand;
potential impact of tariffs, revenues, product volumes, or other expected future financial results or performance; and any statements
using the terms “believe,” “expect,” “intend,” “outlook,” “future,”
“anticipate,” “will,” “could,” “estimate,” “guidance,” or similar
statements are forward-looking statements that involve risks and uncertainties that could cause the company’s actual results
to differ materially from those anticipated. While forward-looking statements are based on assumptions and analyses made by us
that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and
predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition
to differ materially from our expectations. Such risks and uncertainties include the severity and duration of the COVID-19 pandemic
and its impact on the global economy; supply chain and labor disruptions due to COVID-19 or otherwise; not receiving the intended
benefit of current or future restructurings or cost-saving activities; the continued impact of tariffs or a global trade war on
the company’s products and customer purchasing patterns; our ability to obtain the intended benefits and synergies of acquisitions
and facility consolidations; global economic conditions; demand for and delays in delivery of products of the company or its customers;
litigation costs; the company’s ability to develop, commercialize and deploy new products; the impact of reduced or limited
demand by purchasers of certain X-ray products; the impact of competitive products and pricing; the ability to remediate material
weaknesses in internal control; and the other risks listed from time to time in our filings with the U.S. Securities and Exchange
Commission, which by this reference are incorporated herein. Any forward-looking statements made by us in this news release speaks
only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time
to time, and it is not possible for us to predict all of them. The company assumes no obligation to update or revise the forward-looking
statements in this release because of new information, future events, or otherwise.
# # #
For Information
Contact:
Howard Goldman
Director
of Investor & Public Relations
Varex Imaging
Corporation
801.978.5274
| howard.goldman@vareximaging.com
1678
S. Pioneer Road | Salt Lake City, UT 84104 | 801.972.5000
