In a business maneuver that is becoming extremely common during these chaotic economic times, Teladoc Health (NYSE:TDOC) is aiming to raise some capital through an issue of convertible securities. The provider of remote medical services, which has zoomed to greater prominence during the SARS-CoV-2 coronavirus pandemic, announced Wednesday that it intends to float an $800 million issue of convertible, unsecured senior notes.
The notes will pay interest semi-annually, on June 1 and Dec. 1 of each year beginning this December. They will mature on June 1, 2027, if not redeemed, repurchased, or converted. The company has not yet specified an interest rate for the notes.
Teladoc will hold the right to redeem them for cash starting June 5, 2024, under certain circumstances. Investors will be able to fully convert them starting on Dec. 1, 2026; before that, there will be restrictions for doing so, though those restrictions have not yet been specified.
They will be sold in a private placement. The company said it intends to grant the initial purchasers an option to purchase an additional $120 million aggregate principal amount of the same securities.
Teladoc will use the proceeds partially to retire an issue of 3% convertible senior notes that matures in 2022. It is to offer a mix of cash and shares of its common stock in return for the notes; it did not get more specific about the amount of cash or stock that would be offered. The rest of the proceeds are to be utilized to retire debt and acquire assets should good opportunities present themselves, and as working capital.
Investors seemed displeased that the company is pulling this funding lever. They traded the stock down by 4.6% on Thursday while the broader equities market rose on the day.