8-KMaterial AgreementsFinancial EventsSecurities & Listing+1

DEXCOM INC 8-K Report, Material Agreement (May 12, 2017)

Filed May 12, 2017For Securities:DXCM

Summary

DexCom, Inc. (DXCM) announced the completion of its private placement of $350 million in aggregate principal amount of 0.75% Convertible Senior Notes due 2022. These notes were sold to qualified institutional buyers under Rule 144A, exempting them from standard registration requirements. The notes are senior, unsecured obligations of DexCom and will bear a low annual interest rate of 0.75%, payable semi-annually. The principal purpose of this filing is to detail the terms and conditions of this significant financing event. The notes mature on May 15, 2022, but can be repurchased, redeemed, or converted earlier under specific conditions. DexCom has the option to redeem the notes starting May 15, 2020, under certain circumstances. A key feature for investors is the conversion option, allowing holders to convert the notes into DexCom's common stock at an initial conversion price of approximately $99.09 per share, subject to adjustments. The conversion terms are detailed, including conditions related to stock price performance and corporate events.

Key Highlights

  • 1DexCom closed a private placement of $350 million in 0.75% Convertible Senior Notes due 2022.
  • 2The notes are senior, unsecured obligations issued under an Indenture with U.S. Bank National Association as trustee.
  • 3Interest rate on the notes is a low 0.75% per year, payable semi-annually.
  • 4The notes mature on May 15, 2022, with potential for earlier repurchase or redemption.
  • 5DexCom may redeem the notes on or after May 15, 2020, subject to certain conditions.
  • 6Holders can convert the notes into DexCom common stock at an initial conversion price of approximately $99.09 per share.
  • 7Conversion is subject to specific conditions related to stock price, trading price of notes, corporate events, and redemption notices.

Frequently Asked Questions

The issuance of these convertible senior notes represents a financing activity by DexCom to raise capital. The specific use of proceeds is not detailed in this 8-K filing, but such financing typically supports general corporate purposes, working capital, research and development, or potential acquisitions.

Key risks include credit risk (DexCom's ability to repay), interest rate risk (though the rate is fixed), market risk (the value of the notes can fluctuate based on market conditions and DexCom's stock price), and conversion risk (if the stock price doesn't perform as expected, conversion might not be favorable). The notes are unsecured, meaning repayment is dependent on DexCom's general assets. There's also the risk of early redemption by DexCom, which might occur when it's advantageous for the company.

Noteholders can convert their notes under several conditions: 1) if the common stock price is at least 130% of the conversion price for 20 out of 30 trading days in a quarter; 2) during a five-day period if the note's trading price is less than 98% of its conversion value; 3) if DexCom calls the notes for redemption; or 4) upon specified corporate transactions. After February 15, 2022, conversion is permitted regardless of these conditions until maturity.

In the event of a 'fundamental change' (as defined in the Indenture), holders of the notes have the right to require DexCom to repurchase all or a portion of their notes at 100% of the principal amount, plus accrued and unpaid interest. Additionally, under certain circumstances related to a 'make-whole fundamental change' or redemption, holders may receive an increased conversion rate.