CalAmp Corp. (NASDAQ:CAMP) announced today that it intends to offer, subject to market and other conditions, $125 million aggregate principal amount of Convertible Senior Notes due 2020 (the “notes”) in a private offering. The notes will be sold only to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). CalAmp also expects to grant to the initial purchasers of the notes a 30-day option to purchase up to an additional $18.75 million aggregate principal amount of notes.
CalAmp expects to use a portion of the net proceeds from the offering of the notes to fund the cost of convertible note hedge transactions with the hedge counterparties, as described below. CalAmp expects to use the remainder of the net proceeds from the sale of the notes for general corporate purposes, which may include acquisitions, strategic transactions and working capital. In addition, CalAmp expects to receive proceeds from the separate sale of the warrants, as described below.
The notes will mature on May 15, 2020, unless earlier repurchased or converted. Prior to November 15, 2019, the notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day preceding the maturity date of the notes. Upon any conversion, CalAmp’s conversion obligation will be settled in cash, shares of CalAmp common stock, or a combination of cash and shares of CalAmp common stock, at CalAmp’selection. The interest rate on, the initial conversion rate of, and other terms of the notes will be determined by negotiations between CalAmp and the initial purchasers of the notes.
In connection with the offering of the notes, CalAmp expects to enter into privately negotiated convertible note hedge transactions with affiliates of the initial purchasers of the notes or other financial institutions (the “hedge counterparties”). The convertible note hedge transactions are expected to cover, subject to anti-dilution adjustments substantially similar to those applicable to the notes, the number of shares of CalAmpcommon stock that will initially underlie the notes. CalAmp also expects to enter into separate privately negotiated warrant transactions with the hedge counterparties relating to the same number of shares ofCalAmp common stock, subject to customary anti-dilution adjustments. In addition, if the initial purchasers exercise their option to purchase additional notes, CalAmp expects to sell additional warrants to the hedge counterparties and use a portion of the proceeds from the sale of the additional notes and from the sale of the additional warrants to enter into additional convertible note hedge transactions with the hedge counterparties. The convertible note hedge transactions are expected generally to reduce the potential dilution with respect to CalAmp common stock and/or reduce the amount of any cash payments CalAmp is required to make in excess of the principal amount of any converted notes upon conversion of the notes. However, the warrant transactions will separately have a dilutive effect with respect to CalAmp common stock to the extent that the market price per share of CalAmp common stock exceeds the applicable strike price of the warrants on any expiration date of the warrants.
In connection with establishing their initial hedges of the convertible note hedge transactions and warrant transactions, concurrently with, or shortly after, the pricing of the notes, the hedge counterparties or their respective affiliates expect to enter into various derivative transactions with respect to CalAmp common stock. In addition, the hedge counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to CalAmp common stock and/or by purchasing or selling CalAmp common stock or other CalAmp securities in open market transactions and/or privately negotiated transactions following the pricing of the notes from time to time (and are likely to do so during any observation period related to a conversion of notes). Any of these hedging activities could also cause or avoid an increase or decrease in the market price of CalAmp common stock or the notes.
The notes and the shares of CalAmp common stock issuable upon conversion thereof, if any, have not been registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws.(Original Source)
Shares of Calamp closed today at $20.68. CAMP has a 1-year high of $22.36 and a 1-year low of $14.74. The stock’s 50-day moving average is $17.62 and its 200-day moving average is $18.23.
On the ratings front, Calamp has been the subject of a number of recent research reports. In a report issued on March 17, Aegis Capital Corp. analyst Michael Rindos initiated coverage with a Buy rating on CAMP and a price target of $25, which represents a potential upside of 21.1% from where the stock is currently trading. Separately, on March 9, Canaccord Genuity’s Michael Walkley maintained a Buy rating on the stock and has a price target of $26.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Michael Rindos and Michael Walkley have a total average return of 10.2% and 24.3% respectively. Rindos has a success rate of 75.0% and is ranked #2045 out of 3583 analysts, while Walkley has a success rate of 70.8% and is ranked #3.
CalAmp Corp provides wireless communications solutions applications to customers. Its business activities are organized into its Wireless DataCom and Satellite business segments.