MTS Sells 150,000 Additional 8.75% Tangible Equity Units Pursuant To Underwriters' Over-Allotment Option

EDEN PRAIRIE, MN, June 17, 2016 /PRNewswire/ -- MTS Systems Corporation (Nasdaq: MTSC), a leading global supplier of high-performance test systems and position sensors, announced today that the underwriters of its recently closed public offering of 8.75% tangible equity units (the "Tangible Equity Units") have exercised their over-allotment option to purchase an additional 150,000 Tangible Equity Units, bringing the total number of Tangible Equity Units sold in the offering to 1,150,000, and total gross proceeds to approximately $115.0 million. Total net proceeds of the Tangible Equity Units offering and the underwriters' exercise of the over-allotment option to MTS, after deducting underwriting discounts and commissions and other estimated offering expenses payable by MTS, will be approximately $110.2 million.

Each Tangible Equity Unit consists of a prepaid stock purchase contract and an amortizing note. Unless earlier settled or redeemed, each stock purchase contract will automatically settle on July 1, 2019 (subject to postponement in limited circumstances) for between 1.9841 and 2.3810 shares of common stock, par value $0.25 per share (the "Common Stock"), subject to certain adjustments under the terms of the agreement governing the purchase contracts. The amortizing notes will pay equal quarterly installments of $2.1875 per note (except the first such installment, which will be $2.5764 per note), which will constitute a payment of interest and a partial repayment of principal, and which in the aggregate will be equivalent to a 8.75% cash payment per year with respect to each $100 stated amount of each Tangible Equity Unit. The amortizing notes will have a final installment payment date of July 1, 2019 and will be unsecured senior obligations of MTS.

In connection with the underwriters' exercise of the over-allotment option to purchase additional Tangible Equity Units, MTS has entered into additional capped call transactions with an affiliate of J.P. Morgan Securities LLC and an affiliate of Wells Fargo Securities, LLC (the "option counterparties"). The capped call transactions are expected to reduce potential dilution to MTS's Common Stock upon any settlement of the purchase contracts, with such reduction subject to a cap.  The strike price of the capped call transactions will initially be $50.40 per share of the Common Stock, representing a premium of approximately 20.0% above the public offering price of the Common Stock in the recently closed public offering of Common Stock, and is subject to certain adjustments under the terms of the capped call transaction documentation.  The cap price of the capped call transactions will initially be $58.80 per share of our Common Stock, representing a premium of approximately 40.0% above the public offering price of the Common Stock in the recently closed public offering of Common Stock, and is subject to certain adjutments under the terms of the capped call transaction documentation.

The closing of the sale of the additional Tangible Equity Units pursuant to the exercise of the over-allotment option is subject to customary closing conditions and is expected to close on or about June 21, 2016. MTS intends to use approximately $1.0 million of the net proceeds from the exercise of the underwriters' over-allotment option for additional Tangible Equity Units to fund the cost of the capped call transactions and the remaining net proceeds, along with the net proceeds from the offerings of Common Stock and Tangible Equity Units that closed on June 15, 2016, to partially fund the acquisition of PCB Group, Inc. ("PCB"), repay amounts outstanding under its existing revolving credit facility and pay related fees and expenses. If the acquisition of PCB is not completed, MTS intends to use the aggregate net proceeds from the offerings for general corporate purposes.  

J.P. Morgan Securities LLC and Wells Fargo Securities, LLC served as the joint book-running managers for the Common Stock offering and for the Tangible Equity Units offering. The shares of Common Stock and the Tangible Equity Units, including the component stock purchase contracts and amortizing notes, have been issued pursuant to an effective registration statement previously filed with the Securities and Exchange Commission (the "SEC") on Form S-3 (File No. 333-211901) and are available for review on the SEC's website at www.sec.gov. A final prospectus supplement related to the offering of Common Stock and a final prospectus supplement related to the offering of Tangible Equity Units have been filed with the SEC and are available on the SEC's website at www.sec.gov.

Copies of the final prospectus supplement and the accompanying base prospectus related to the Common Stock and the final prospectus supplement and the accompanying base prospectus related to the Tangible Equity Units may be obtained from J.P. Morgan Securities LLC (at Attn: Broadridge Financial Solutions at 1155 Long Island Avenue, Edgewood, New York 11717, or by calling 1-866-803-9204) and Wells Fargo Securities, LLC (at Attn: Equity Syndicate Department, 375 Park Avenue, New York, New York 10152, [email protected] or by calling 1-800-326-5897).

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About MTS Systems Corporation

MTS Systems Corporation's testing hardware, software and services solutions help customers accelerate and improve their design, development and manufacturing processes and are used for determining the mechanical behavior of materials, products and structures. MTS high-performance position sensors provide controls for a variety of industrial and vehicular applications. MTS had 2,400 employees as of October 3, 2015 and revenue of approximately $564 million for the fiscal year ended October 3, 2015. Additional information on MTS can be found at www.mts.com.

Cautionary Information Regarding Forward-Looking Statements

This release contains "forward-looking statements" made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the benefits of the merger, including future financial and operating results, plans, objectives, expectations and intentions and other statements that are not historical facts.  These statements are based on MTS's current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements.  Risks, uncertainties and assumptions include, but are not limited to: (1) the proposed transaction may not be completed, or completed within the expected timeframe; (2) costs relating to the proposed transaction may be greater than expected; (3) the possibility that a governmental entity may prohibit, delay or refuse to grant a necessary regulatory approval in connection with the proposed transaction; (4) problems that may arise in integrating the businesses of the two companies and that the integration may not be successful; (5) the combined company may be unable to achieve the anticipated synergies or those benefits may take longer to realize than expected; (6) the businesses of one or both companies may suffer as a result of uncertainties surrounding the proposed transaction including disruption of relationships with customers, employees or suppliers; (7) increased competition and its effect on pricing; and (8) other risks beyond the control of either party.  Additional factors that could cause MTS's actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to, those described in the "Risk Factors" section in each of the prospectus supplements with respect to the offerings and MTS's most recent Form 10-K filed with the SEC and updated in any subsequent Quarterly Reports on Form 10-Q and other filings with the SEC, each of which is available on the SEC's website at www.sec.gov. Forward-looking statements speak only as of the date on which statements are made, and MTS undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made to reflect the occurrence of unanticipated events or circumstances.

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SOURCE MTS Systems Corporation

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