Inseego Corp. (NASDAQ:INSG) (the “Company”), a pioneer in 5G and intelligent IoT device-to-cloud solutions, today announced that it has agreed to sell an aggregate of $100.0 million in principal amount of its 3.25% convertible senior notes due 2025 (the “Notes”), in an underwritten public offering (the “Offering”). The Company has granted the underwriters a 30-day option to purchase up to an additional $15.0 million in aggregate principal amount of the Notes in connection with the Offering, solely to cover over-allotments. The Offering is expected to close on May 12, 2020, subject to customary closing conditions.
The Notes will be senior unsecured obligations of the Company and will bear interest at a fixed rate of 3.25% per year, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2020. The Notes will mature on May 1, 2025, unless earlier repurchased, redeemed or converted. Holders of the Notes will be able to convert their Notes into shares of the Company’s common stock at their option, at any time, until the close of business on the scheduled trading day immediately before the maturity date. Upon conversion of a Note, the Company will deliver for each $1,000 principal amount of converted Notes a number of shares of its common stock (together with cash in lieu of any fractional share) equal to the conversion rate. The initial conversion rate will be 79.2896 shares of the Company’s common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $12.61 per share of the Company’s common stock, subject to adjustment upon the occurrence of specified events. Under certain circumstances, holders who convert their notes may also be entitled to receive an interest make-whole payment payable, at the Company’s election, in either cash or shares of its common stock. In addition, under certain circumstances, the Notes will be redeemable, in whole or in part, for cash at the Company’s option at any time, and from time to time, on or after May 6, 2023 and on or before the scheduled trading day before the maturity date.
Immediately following the Offering, the Company intends to exchange approximately $44.8 million principal amount of its existing 5.50% convertible senior notes due 2022 for a combination of cash and $80.0 million principal amount of Notes in concurrent private placement transactions (the “Private Exchange Transactions”). Notes issued in the Private Exchange Transactions will be part of the same series as the Notes issued in the Offering, but will be subject to certain transfer restrictions that will not be applicable to the Notes issued in the Offering. The Offering is not conditioned upon the closing of the Private Exchange Transactions, but the Private Exchange Transactions are conditioned upon the closing of the Offering.
The Company estimates that the net proceeds from this offering will be approximately $97.0 million (or approximately $111.6 million if the underwriter fully exercises its over-allotment option), after deducting the underwriter’s discounts and commissions and estimated offering expenses payable by the Company. The Company intends to use a portion of the net proceeds from the Offering (i) to repay in full and terminate its existing credit agreement, which currently carries interest at a rate of 9.24% per annum, and (ii) to pay the cash consideration due in connection with the Private Exchange Transactions. The Company intends to use the remainder of the net proceeds from the Offering for general corporate purposes.
Stifel is acting as the sole book-running manager for the Offering.