On November 19, 2019 LabCorp (NYSE: LH) reported that it has provided notice of its intention to redeem all of its outstanding Zero Coupon Convertible Subordinated Notes due 2021 (Zero Coupon Notes) for cash on Dec. 19, 2019, (Redemption Date) in accordance with the terms of the Indenture, dated as of Oct. 23, 2006, (Indenture), between LabCorp and The Bank of New York Mellon, as trustee (Trustee) and the conversion agent (Press release, LabCorp, NOV 19, 2019, View Source [SID1234552831]). The redemption price will be equal to $966.20 per $1,000 principal amount of Zero Coupon Notes at maturity, plus accrued and unpaid contingent cash interest to the Redemption Date (Redemption Price). The current outstanding aggregate principal amount at maturity of the Zero Coupon Notes is approximately $935,000.
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As a result of the issuance of the notice of redemption, the Zero Coupon Notes are convertible into cash and Common Stock of LabCorp, if any, subject to the terms of the Zero Coupon Notes and the Indenture. Zero Coupon Notes may be converted at any time before the close of business on Dec. 17, 2019, at the current conversion rate of 13.4108 shares of Common Stock per $1,000 principal amount of Zero Coupon Notes at maturity.
In order to exercise the option to convert all or a portion of the Zero Coupon Notes, holders must validly surrender their Zero Coupon Notes at any time through the close of business at 5:00 p.m., New York City time, on Dec. 17, 2019. The Trustee has informed LabCorp that, as of this date, all custodians and beneficial holders of the Zero Coupon Notes hold the Zero Coupon Notes through Depository Trust Company (DTC) accounts and that there are no certificated Zero Coupon Notes in non-global form. Accordingly, all Zero Coupon Notes surrendered for conversion must be delivered through the transmittal procedures of DTC.
Should Zero Coupon Notes be converted, LabCorp would be required to pay holders in cash for the accreted principal amount of the securities to be converted, with the remaining amount, if any, to be satisfied with shares of Common Stock. The shares required for settlement of the Zero Coupon Notes are included in LabCorp’s computation of fully diluted earnings per share.
Original issue discount and contingent cash interest on the Zero Coupon Notes will cease to accrue on and after the Redemption Date, and the only remaining right of holders of the Zero Coupon Notes will be to receive payment of the Redemption Price.