| Item 1.01. | Entry into a Material Definitive Agreement. |
Indenture and Notes
As previously disclosed, on February 28, 2023, Invitae Corporation (the “Company”) entered into separate, privately negotiated purchase and exchange agreements (collectively, the “Exchange Agreements”) with respect to (a) the issuance of $275,257,000 aggregate principal amount of the Company’s new 4.5% Series A Convertible Senior Secured Notes due 2028 (the “Series A New Notes”) and 14,219,859 shares (the “New Shares”) of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), in exchange for $305,727,000 aggregate principal amount of the Company’s currently outstanding 2.00% Convertible Senior Notes due 2024 (the “Old Notes”) and (b) the issuance and sale of $30,000,000 aggregate principal amount of the Company’s new 4.5% Series B Convertible Senior Secured Notes due 2028 (the “Series B New Notes” and, together with the Series A New Notes, the “Notes”) for cash.
On March 7, 2023, the Company issued the Notes and the New Shares. The Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of March 7, 2023, between the Company, the guarantor parties thereto and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”) and collateral agent (the “Collateral Agent”).
The Notes accrue interest at a rate of 4.5% per annum, payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, beginning on June 15, 2023. The Notes will mature on March 15, 2028, unless earlier repurchased, redeemed or converted.
Based on the initial conversion price of $2.5800, the Notes are convertible into 118,316,667 shares of Common Stock, subject to the potential issuance of additional shares in the event of optional redemptions or Major Transactions (discussed below).
At any time prior to the 60th day prior to the maturity date of the Notes, the Company has the option to redeem all or any portion of the principal amount of the Notes for cash equal to the principal amount of the Notes being redeemed, subject to certain conditions specified in the Indenture. Upon redemption of any Notes, the Company will (i) issue warrants to purchase shares of the Common Stock (“Warrants”) covering the same number of shares of Common Stock underlying, and at an exercise price equal to the conversion price of, the redeemed Notes, unless the aggregate principal amount of Notes outstanding represents less than 10% of the aggregate principal amount of Notes initially issued and certain other conditions are satisfied, and (ii) make a make-whole payment as determined pursuant to the Indenture, together with accrued and unpaid interest through the redemption date. In addition, in certain circumstances, the Company may be required to issue additional shares of Common Stock for any Notes converted in connection with a notice of optional redemption. The Company will not be able to effect any optional redemption during a delisting event or unless all conversion shares and warrant shares are freely tradable and unless certain other conditions specified in the Indenture are satisfied.
The Notes are convertible at any time at the option of the holders thereof, provided that the holder is prohibited from converting Notes into shares of Common Stock if, upon such conversion, the converting holder (together with certain affiliates and “group” members) would beneficially own more than 4.9% of the total number of shares of Common Stock then issued and outstanding (the “Beneficial Ownership Cap”). In addition, prior to such time that the Company obtains stockholder approval for the issuance of shares of Common Stock upon conversion of the Series A New Notes in excess of the limitations imposed by the NYSE rules (the “NYSE Cap”), the holder is prohibited from converting Series A New Notes into shares of Common Stock in excess of such NYSE Cap, and the Company would instead be required to settle any such conversion in cash if the Company is not able to obtain the stockholder approval within the grace period specified in the Indenture.
