INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K
Indenture and Notes
On March 3, 2022, LumiraDx Limited (the “Company”) completed its previously announced private placement of $56.5 million aggregate principal amount of 6.00% Convertible Senior Subordinated Notes due 2027 (the “Notes”). The Notes were sold under privately negotiated subscription agreements (the “Subscription Agreements”) entered into by the Company on March 1, 2022 with certain investors (the “Investors”) in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). The Notes were issued pursuant to the indenture (the “Indenture”), dated March 3, 2022, by and between the Company and U.S. Bank Trust Company, National Association (the “Trustee”). The Notes are senior subordinated unsecured obligations of the Company, subordinated in right of payment to certain specified designated senior indebtedness of the Company, including indebtedness and borrowings under the Company’s existing senior secured loan agreement, and bear interest at a rate of 6.00% per annum from, and including, March 3, 2022 (the “Closing Date”), payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2022. In certain circumstances, the Company may be required to pay additional amounts as a result of any applicable tax withholding or deductions required in respect of payments on the Notes. The Notes will mature on March 1, 2027, unless earlier converted by the holders or repurchased or redeemed by the Company.
Subject to the terms of the Indenture, the Notes are convertible at the option of each holder at an initial conversion rate of 108.4346 common shares, $0.0000028 par value per share, of the Company (the “Common Shares”) per $1,000 principal amount of Notes (the “Conversion Rate”), which is equal to an initial conversion price of approximately $9.22 per Common Share (the “Conversion Price”). Upon conversion, the Notes may be settled in cash, Common Shares or a combination of cash and Common Shares, at the Company’s election (subject to certain limitations). The Conversion Rate may be increased on March 3, 2023 and March 3, 2024, if the average of the daily volume weighted average prices of the Common Shares over the 20 consecutive trading days immediately preceding either date is below a specified level, provided that the Conversion Rate may not be increased to a rate that exceeds 137.9310 Common Shares per $1,000 principal amount (the “Ceiling Conversion Rate”). The Conversion Rate (including the Ceiling Conversion Rate) is subject to adjustment for certain events or distributions but will not be adjusted for any accrued and unpaid interest. Following certain specified transactions or events (each of which are included in the definition “Make-Whole Fundamental Change” in the Indenture), the Company will increase the Conversion Rate for a holder who elects to convert its Notes in connection with any such transaction or event in certain circumstances.
The Company may redeem for cash all of the Notes in connection with certain tax-related events (any such redemption, a “Tax Redemption”). In addition, the Company may redeem (any such redemption, an “Optional Redemption”) for cash any or all of the Notes, at its option, on or after the later of September 1, 2022 and the date that is 30 days after the initial effectiveness of a registration statement contemplated by the registration rights agreement described below (the “Registration Rights Agreement”), but only if (1) the last reported sale price per Common Share exceeds 130% of the Conversion Price on (x) each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the trading day immediately before the Company sends the applicable notice of redemption (the “Redemption Notice Date”); and (y) the trading day immediately before the Redemption Notice Date; and (2) unless the Company elects (x) to settle all conversions of Notes called for Optional Redemption in cash and (y) to pay any owed Interest Make-Whole Payment (as defined herein) in cash, in each case, with respect to conversions of Notes during the related redemption period that have been called for redemption after the first anniversary of the Closing Date, a registration statement registering the resale of all shares constituting Registrable Securities (as defined herein) (subject to certain requirements with respect to the delivery of information to the Company by the holders) remains effective and useable for a specified period prior to the applicable redemption date. The redemption price in connection with a Tax Redemption or Optional Redemption would be equal to 100% of the principal amount of the Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes, which means that the Company is not required to redeem or retire the Notes periodically. Holders that convert their Notes in connection with an Optional Redemption will be entitled to an interest make-whole payment equal to the remaining scheduled payments of interest, if any, that would have been made on the Notes to be converted had such Notes remained outstanding through March 1, 2026 (an “Interest Make-Whole Payment”). The Company is permitted to settle any Interest Make-Whole Payment in cash or Common Shares, at its election.
