3D Systems has agreed to exchange $92.03 million of its 5.875% secured notes due 2030 for a mix of cash, stock and new, lower-coupon convertible debt due 2031. The transaction would reduce the principal amount of debt being exchanged, but also use $20 million in cash and issue 13.47 million shares.
The deal is expected to close around November 12, subject to conditions tied to delivery of the existing notes. If completed in full, it would replace secured debt with new senior unsecured notes and leave no 2030 notes outstanding.
Key details
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What noteholders receive: For $92.03 million of 2030 notes, participating holders are set to receive $20 million in cash, 13,471,138 shares of common stock and $85 million of new notes. Accrued interest on the exchanged notes will also be paid through the closing date, subject to adjustments if closing occurs after December 1.
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New notes’ terms: The replacement notes will carry a 3.30% annual interest rate, payable twice a year, and mature on April 1, 2031. They will be senior unsecured obligations, unlike the secured 2030 notes.
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Conversion terms: The new notes will initially convert at a rate of 291.3753 shares per $1,000 of principal, equivalent to about $3.43 per share. That is roughly 30% above 3D Systems’ November 4 closing share price of $2.64. Conversion is restricted to specified circumstances and periods before January 1, 2031; after that, holders may convert until shortly before maturity. The company can settle conversions in cash, shares or a combination.
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Redemption and investor protections: 3D Systems generally cannot redeem the new notes before October 5, 2029. After that date, it may redeem them if the stock-price conditions in the agreement are met. Holders can require cash repurchase at face value plus accrued interest following a qualifying fundamental change. The notes also provide for potential increases in the conversion rate in certain change-of-control or redemption situations.
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Closing conditions and timing: The exchange is expected to close around November 12 and depends on delivery of the existing notes. If all eligible 2030 notes are not delivered on that date, closing may be postponed, initially no later than November 19. Under a further extension scenario, closing could be delayed to December 4, but it would require at least 75% of the notes to be exchanged and valid consents from holders of at least 75% of the outstanding principal. If the transaction has not closed by December 15, the agreements terminate. If fewer than 75% of the notes are subject to withdrawal requests in the specified scenario, the agreements also terminate.
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Possible changes to the old debt documents: In the further-extension scenario, participating holders have agreed to consent to changes that would release the collateral securing the 2030 notes and their guarantees, end related collateral documents, and amend or waive certain covenants, default provisions and related terms. Holders would receive no separate payment for those consents. If all eligible 2030 notes are exchanged, the company expects the old indenture to be discharged, with no 2030 notes left outstanding.
What changes for investors
If completed, the exchange would cut the principal amount represented by the exchanged debt from $92.03 million to $85 million, while replacing a 5.875% coupon with a 3.30% coupon. In return, the company would pay $20 million in cash and issue more than 13.4 million shares, diluting existing shareholders. The new debt would also be unsecured rather than backed by collateral.