Novanta announced on November 5, 2025 that it will issue 11 million tangible equity units, each priced at $50, for a total aggregate stated amount of $550 million. Each unit comprises a prepaid stock purchase contract and a senior amortizing note due 2028, allowing investors to acquire a stake in the company while providing Novanta with immediate cash flow.
The company plans to use the proceeds to repay approximately $317 million of indebtedness under its revolving credit facility, thereby reducing its interest expense and freeing up borrowing capacity. The remaining cash will support working‑capital needs, fund potential acquisitions, and accelerate investment in its high‑growth product platforms such as insufflators, pumps, robotic‑surgery components, and AI‑driven precision‑medicine solutions. Prior to the offering, Novanta’s debt‑to‑equity ratio stood at roughly 1.2:1, and the company had been actively restructuring to shift from low‑margin industrial components to higher‑margin medical‑device segments; the new capital injection is expected to accelerate that transition.
The timing of the offering aligns with a favorable market environment for equity units, as investor appetite for structured financing products remains strong and interest rates are relatively low. Management cited the need to strengthen the balance sheet amid recent acquisitions and to maintain a robust credit profile that supports future growth initiatives. The repayment of $317 million will reduce the company’s leverage and improve its debt‑service coverage ratios, positioning Novanta to pursue strategic acquisitions without over‑extending its credit lines.
Analysts have noted the offering as a prudent step to reduce leverage, though some have cautioned that the issuance of equity units will dilute existing shareholders. The move is expected to be viewed positively by credit rating agencies, as it improves liquidity and reduces debt‑service risk, potentially preserving or enhancing Novanta’s credit standing.
With the balance sheet strengthened, Novanta is poised to accelerate its acquisition strategy and invest in product development. Management reiterated confidence in mid‑single‑digit organic growth for 2026, emphasizing that the new capital will support the company’s expansion into high‑margin medical‑device markets and the integration of recent acquisitions such as Keonn Technologies. The offering therefore positions Novanta to pursue growth while maintaining financial flexibility.
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