Preferreds will be convertible at 50% premium to March 10 share price
By Angela McDaniels
Tacoma, Wash., March 14 – Connecture, Inc. agreed to sell $52 million of 7.5% series A convertible preferred stock to Francisco Partners IV, LP, Francisco Partners IV-A, LP and Chrysalis Ventures II, LP.
David Jones Jr., the chairman of the company’s board of directors, is a general partner of Chrysalis, according to an 8-K filing with the Securities and Exchange Commission.
The conversion price will be $4.50 per share of common stock. The price is a 50% premium over the company’s closing share price on March 10.
Beginning in 2018, the company may force conversion if its closing share price is at least 175% of the then-applicable conversion price for 45 consecutive trading days when there was a minimum average trading volume of at least 75,000 shares for 40 of such 45 trading days.
The convertibles will be putable after seven years. In addition, they will be putable and callable in the event of a fundamental change.
The investors will be entitled to vote with the common stock on an as-converted basis.
When the placement closes, the investors will be granted the right to require the company to file with the SEC a registration statement for their convertibles and any conversion shares and the right to request three underwritten offerings per year. They will also receive unlimited “piggy-back” registration rights with respect to the convertibles and conversion shares.
The company said the placement will reduce leverage and “accelerate its growth opportunities.”
The placement is subject to shareholder approval. The company plans to seek this approval at its annual stockholders meeting to be held in April or May and to settle the placement promptly thereafter.
Brookfield, Wis.-based Connecture is a web-based consumer shopping, enrollment and retention platform for health insurance distribution.
| Issuer: | Connecture, Inc.
|
| Issue: | Series A convertible preferred stock
|
| Amount: | $52 million
|
| Shares: | 52,000
|
| Coupon: | 7.5%
|
| Price: | $1,000
|
| Conversion price: | $4.50
|
| Conversion premium: | 50%
|
| Put option: | After seven years or upon a fundamental change
|
| Call option: | Upon a fundamental change
|
| Warrants: | No
|
| Investors: | Francisco Partners IV, LP, Francisco Partners IV-A, LP and Chrysalis Ventures II, LP
|
| Pricing date: | March 11
|
| Stock symbol: | Nasdaq: CNXR
|
| Stock price: | $3.00 at close March 10
|
| Market capitalization: | $67.5 million
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