Alphatec Holdings Inc. (ATEC) stock plunged 9.54% in after-hours trading on Monday, following the company's announcement of a proposed offering of $300 million convertible senior notes due in 2030.
The medical device firm plans to offer the convertible bonds in a private placement to institutional investors. The company intends to use a portion of the net proceeds to pay for capped call transactions, repurchase a portion of its outstanding 0.75% convertible notes due 2026, and use the remainder for general corporate purposes.
The market reacted negatively to the news, as convertible debt offerings can lead to potential equity dilution for existing shareholders when the notes are converted into shares. Additionally, the issuance of new debt increases the company's financial leverage and interest expenses, which may raise concerns about its future cash flows and profitability.
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