Filed Pursuant to Rule 424(b)(2)
Registration No. 333-238068

 

The information in this prospectus is not complete and may be changed. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale thereof is not permitted.

 

SUBJECT TO COMPLETION, DATED SEPTEMBER 29, 2020

 

PRELIMINARY PROSPECTUS SUPPLEMENT

(To Prospectus dated May 20, 2020)

 

$150,000,000 Shares

 

 

Owens & Minor, Inc.

Common Stock

 

 

 

We are offering $150,000,000 of shares of our common stock, par value $2.00 per share (“Common Stock”), pursuant to this prospectus supplement and the accompanying prospectus. Our Common Stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “OMI.” On September 28, 2020, the closing price of our Common Stock as reported on the NYSE was $21.69.

 

 

 

Investing in our Common Stock involves a high degree of risk. See “Risk Factors” beginning on page S-11 of this prospectus supplement and the risk factors included in the information incorporated by reference in this prospectus supplement and the accompanying prospectus to read about certain factors you should consider before buying our Common Stock.

 

 

 

		Per Share				Total
Public offering price		$				$
Underwriting discounts and commissions(1)		$				$
Proceeds, before expenses, to us		$				$

 

(1)

See “Underwriting (Conflicts of Interest)” in this prospectus supplement for additional information regarding underwriting compensation payable to the underwriters and estimated offering expenses.

 

We have granted the underwriters an option to acquire from us up to $22,500,000 of additional shares of Common Stock at the offering price less the underwriting discounts and commissions of $             per share. The underwriters can exercise this option at any time within 30 days after the date of this prospectus supplement.

 

Delivery of the shares of Common Stock will be made on or about                 , 2020 through the book-entry facilities of the Depository Trust Company.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

 

Citigroup		BofA Securities		J.P. Morgan		Baird

 

 

 

The date of this prospectus supplement is                 , 2020.

PROSPECTUS SUPPLEMENT

 

ABOUT THIS PROSPECTUS SUPPLEMENT			S-ii
WHERE YOU CAN FIND MORE INFORMATION			S-v
INCORPORATION BY REFERENCE			S-vi
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS			S-vii
PROSPECTUS SUPPLEMENT SUMMARY			S-1
RISK FACTORS			S-11
USE OF PROCEEDS			S-16
CAPITALIZATION			S-17
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES FOR NON-U.S. HOLDERS			S-18
UNDERWRITING (CONFLICTS OF INTEREST)			S-23
LEGAL MATTERS			S-31
EXPERTS			S-32
BASE PROSPECTUS
ABOUT THIS PROSPECTUS			i
WHERE YOU CAN FIND MORE INFORMATION			ii
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE			ii
FORWARD-LOOKING STATEMENTS			iii
OUR COMPANY			1
RISK FACTORS			2
USE OF PROCEEDS			3
GENERAL DESCRIPTION OF SECURITIES THAT MAY BE SOLD			4
DESCRIPTION OF CAPITAL STOCK			5
DESCRIPTION OF DEPOSITARY SHARES			9
DESCRIPTION OF WARRANTS			14
DESCRIPTION OF STOCK PURCHASE CONTRACTS			16
DESCRIPTION OF UNITS			17
DESCRIPTION OF SUBSCRIPTION RIGHTS			18
PLAN OF DISTRIBUTION			20
LEGAL MATTERS			22
EXPERTS			22

 

S-i

ABOUT THIS PROSPECTUS SUPPLEMENT

 

This document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this offering. The second part is the accompanying prospectus, which contains and incorporates by reference important business and financial information about us and other information about this offering, including a description of the Common Stock offered hereby, as well as more general information, some of which may not apply to this offering. This prospectus supplement and the accompanying prospectus are part of a registration statement that we filed with the U.S. Securities and Exchange Commission (the “SEC”) utilizing a “shelf” registration process.

 

Neither we nor the underwriters have authorized anyone to provide you with any information other than that contained or incorporated by reference in this prospectus supplement, the accompanying prospectus or any related free writing prospectus filed by us with the SEC. Neither we nor the underwriters take responsibility for, or can provide any assurance as to the reliability of, any other information that others may give you. Neither we nor the underwriters are making an offer to sell, or soliciting an offer to buy, these securities in any jurisdiction where the offer or sale is not permitted. The information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus or any related free writing prospectus prepared by us is accurate only as of the date of the applicable document. Our business, financial condition, results of operations and prospects may have changed since those dates.

 

We are offering to sell, and seeking offers to buy, shares of Common Stock only in jurisdictions where offers and sales are permitted. The distribution of this prospectus supplement and the accompanying prospectus and the offering of the Common Stock in certain jurisdictions may be restricted by law. Persons outside the United States who come into possession of this prospectus supplement and the accompanying prospectus must inform themselves about, and observe any restrictions relating to, the offering of the Common Stock and the distribution of this prospectus supplement and the accompanying prospectus outside the United States. This prospectus supplement and the accompanying prospectus do not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this prospectus supplement and the accompanying prospectus by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.

 

This prospectus supplement and the accompanying prospectus do not contain all of the information included in the registration statement as permitted by the rules and regulations of the SEC. For further information, we refer you to our registration statement on Form S-3, including its exhibits, of which this prospectus supplement and the accompanying prospectus form a part. We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and therefore file reports and other information with the SEC. Statements contained in this prospectus supplement and the accompanying prospectus about the provisions or contents of any agreement or other document are only summaries. If SEC rules require that any agreement or document be filed as an exhibit to the registration statement, you should refer to that agreement or document for its complete contents.

 

If the description of this offering varies between this prospectus supplement and the accompanying prospectus, you should rely on the information in this prospectus supplement. Any statement made in this prospectus supplement or in a document incorporated or deemed to be incorporated by reference in this prospectus supplement will be deemed to be modified or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or in any other subsequently filed document that is also incorporated or deemed to be incorporated by reference in this prospectus supplement modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement.

 

S-ii

Terms used in this Prospectus Supplement

 

Unless otherwise indicated or the context otherwise requires, references in this prospectus to:

 

•

“Adjusted operating income” refers to operating income excluding intangible amortization, goodwill and intangible asset impairment charges, acquisition-related and exit and realignment charges, fair value adjustments related to purchase accounting, software as a service implementation costs, income from discontinued operations and certain other items;

 

•

“Adjusted operating income as a percent of revenue” or “adjusted operating margin” refers to Adjusted operating income as a percent of revenue;

 

•

“Adjusted net income” refers to (i) for the six months ended June 30, 2019 and 2020, income (loss) from continuing operations, and (ii) for the fiscal year 2018 and 2019 net loss; excluding for each of (i) and (ii) intangible amortization and accompanying income tax expense (benefit), goodwill and intangible asset impairment charges and accompanying income tax expense (benefit), acquisition-related and exit and realignment charges and accompanying income tax expense (benefit), fair value adjustments related to purchase accounting and accompanying income tax expense (benefit), software as a service implementation costs and accompanying income tax expense (benefit), (gain) loss on extinguishment and modification of debt and accompanying income tax expense (benefit), tax adjustments, adjusted income from discontinued operations and certain other items and accompanying income tax expense (benefit);

 

•

“Adjusted net income per share” refers to (i) for the six months ended June 30, 2019 and 2020, income (loss) from continuing operations per diluted common share, and (ii) for the fiscal year 2018 and 2019 net loss, per diluted common share; excluding for each of (i) and (ii) intangible amortization, goodwill and intangible asset impairment charges, acquisition-related and exit and realignment charges, fair value adjustments related to purchase accounting, software as a service implementation costs, (gain) loss on extinguishment and modification of debt, tax adjustments and certain other items;

 

•

“Term A Loans” refers to the Term A-1 Loan and the Term A-2 Loan under that certain Credit Agreement dated as of July 27, 2017 (as amended, modified, extended, restated, replaced, or supplemented, the “Credit Agreement”) among us, Wells Fargo Bank, N.A., JPMorgan Chase Bank, N.A., Bank of America, N.A. and a syndicate of financial institutions, including Citibank, N.A.; and

 

•

“we,” “our,” “us,” “OMI,” “the company” and “our company” refer to Owens & Minor, Inc. and its consolidated subsidiaries.

 

Adjusted operating income, Adjusted operating income as a percent of revenue (or adjusted operating margin), Adjusted net income and Adjusted net income per share are non-GAAP financial measures. For further information about our non-GAAP financial measures including detailed adjustments made in the calculation of our non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measure, we refer you to the sections entitled “Prospectus Supplement Summary—Summary Consolidated Financial and Other Data” herein.

 

Basis of Presentation

 

Unless otherwise indicated or the context otherwise requires, financial data included, or incorporated by reference, in this prospectus supplement or the accompanying prospectus reflect the business and operations of Owens & Minor, Inc. and its consolidated subsidiaries. See “Selected Consolidated Financial Data” in our Annual Report on Form 10-K for year ended December 31, 2019 (“2019 Annual Report”) and our consolidated financial statements and related notes incorporated by reference in this prospectus supplement and the accompanying prospectus for more information.

 

Trademarks

 

This prospectus and the accompanying prospectus contain references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this

 

S-iii

prospectus may appear without the ^™ or ^® symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

Market, Ranking and Other Industry Data

 

In this prospectus supplement and the accompanying prospectus, we have included or incorporated by reference information regarding market data obtained from internal sources, market research, publicly available information, and industry publications, including the size of our addressable market. Estimates are inherently uncertain, involve risks and uncertainties, and are subject to change based on various factors, including those discussed in the sections of this prospectus supplement titled “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements.” We believe that these sources and estimates are reliable as of the date of this prospectus supplement but have not independently verified them and cannot guarantee their accuracy or completeness.

 

S-iv

WHERE YOU CAN FIND MORE INFORMATION

 

We file annual, quarterly and current reports, proxy statements and other information with the SEC under the Exchange Act. The SEC filings are available at the Internet website maintained by the SEC at www.sec.gov. Unless specifically listed below, the information contained on the SEC’s website is not intended to be incorporated by reference in this prospectus supplement and you should not consider that information a part of this prospectus supplement.

 

We have filed with the SEC a “shelf” registration statement on Form S-3 under the Securities Act of 1933, as amended (the “Securities Act”), relating to the Common Stock offered hereby. This prospectus supplement and the accompanying prospectus is a part of that registration statement, but does not contain all of the information in the registration statement or the exhibits and schedules thereto as permitted by the rules and regulations of the SEC. We have omitted parts of the registration statement in accordance with the rules and regulations of the SEC. For more detail about us and the Common Stock offered by this prospectus supplement, you may examine the registration statement on Form S-3 and the exhibits filed with it.

 

S-v

INCORPORATION BY REFERENCE

 

We incorporate by reference information into this prospectus supplement, which means that we disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus supplement, except to the extent superseded by information contained herein or by information contained in documents filed with the SEC after the date of this prospectus supplement. This prospectus supplement incorporates by reference the documents set forth below that have been previously filed with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules):

 

•

our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on March 4, 2020, including the information specifically incorporated in our Annual Report on Form 10-K from our Definitive Proxy Statement on Schedule 14A filed with the SEC on March  19, 2020 and definitive additional materials filed on April 6, 2020;

 

•

our Quarterly Report on Form 10-Q for the fiscal quarter ended March  31, 2020 filed with the SEC on May 6, 2020 and our Quarterly Report on Form 10-Q for the fiscal quarter June 30, 2020 filed with the SEC on August  5, 2020 (collectively, the “Quarterly Reports”);

 

•

our Current Reports on Form 8-K filed with the SEC on February 18, 2020 (item 1.01 only), February  19, 2020 (item 1.01 only), March 2, 2020, March  27, 2020 (item 8.01 only), April  6, 2020, May  6, 2020 (item 5.02 and item 5.07 only), May 21, 2020 and June 18, 2020 (item 2.01 only), and our Current Report on Form 8-K/A filed with the SEC on April 9, 2020; and

 

•

our Form 8-A filed with the SEC on July 13, 2004, including any amendments or supplements thereto.

 

We also incorporate by reference in this prospectus supplement additional documents that we may file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date of this prospectus supplement until all of the shares of Common Stock offered hereby have been sold or the offering is otherwise terminated; provided, however, that we are not incorporating by reference any documents or information furnished and not filed with the SEC.

 

Any statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus supplement will be deemed to be modified or superseded to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference in this prospectus supplement modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement.

 

You may obtain copies of any of these filings by contacting us at the address and phone number indicated below or by contacting the SEC as described above. Documents incorporated by reference are available from us without charge, excluding all exhibits, unless an exhibit has been specifically incorporated by reference in this prospectus supplement, by requesting them in writing, by telephone or via the Internet at:

 

Owens & Minor, Inc.

9120 Lockwood Boulevard,

Mechanicsville, Virginia 23116

(804) 723-7000

Attn: Corporate Secretary

Internet Website: owens-minor.com

 

THE INFORMATION CONTAINED ON, OR ACCESSIBLE THROUGH, OUR WEBSITE DOES NOT CONSTITUTE A PART OF, AND IS NOT INCORPORATED BY REFERENCE IN, THIS PROSPECTUS SUPPLEMENT.

 

S-vi

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

 

Some of the information included or incorporated by reference in this prospectus and the applicable prospectus supplement contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, all forward-looking statements involve risks and uncertainties and, as a result, actual results could differ materially from those projected, anticipated or implied by these statements. Such forward-looking statements involve known and unknown risks, including, but not limited to:

 

•

our ability to achieve revenue and operating income goals may be affected by: COVID-19 related factors, risks and challenges, including among others, the length of time that the pandemic continues, and any worsening of the pandemic or future pandemics, related governmental responses, a decrease in revenue ultimately resulting in less cash flow, longer duration in receivables collection, the need to expedite payments to important suppliers may grow, shifts in demand away from certain products we manufacture and distribute, reduced workforces which may be caused by, but not limited to, the temporary inability of the workforce to work due to illness, quarantine, or government mandates, temporary production and distribution center and office closures due to reduced workforces or government mandates, availability of raw materials, potential resulting labor negotiations or disputes, changes in the types and numbers of businesses that compete with us, including non-traditional competitors, and the aggressiveness of that competition, impacts of the pandemic or future pandemics on other third parties with whom we conduct business, the healthcare industry, and the broader business environment, and trends in elective surgeries and other healthcare spending not directly associated with COVID-19;

 

•

competitive pressures in the marketplace, including intense pricing pressure;

 

•

our ability to retain existing and attract new customers in a market characterized by significant customer consolidation and intense cost-containment initiatives;

 

•

our dependence on sales to certain customers or the loss or material reduction in purchases by key customers;

 

•

our dependence on distribution of product of certain suppliers;

 

•

our ability to successfully identify, manage or integrate acquisitions;

 

•

our ability to successfully manage our international operations, including risks associated with changes in international trade regulations, foreign currency volatility, changes in regulatory conditions, deteriorating economic conditions, adverse tax consequences, and other risks of operating in international markets;

 

•

uncertainties related to and our ability to adapt to changes in government regulations, including healthcare laws and regulations;

 

•

risks arising from possible violations of legal, regulatory or licensing requirements of the markets in which we operate;

 

•

uncertainties related to general economic, regulatory and business conditions;

 

•

our ability to successfully implement our strategic initiatives;

 

•

the availability of and modifications to existing supplier funding programs and our ability to meet the terms to qualify for certain of these programs;

 

•

the effect of price volatility in the commodities markets, including fuel price fluctuations, on our operating costs and supplier product prices;

 

•

our ability to adapt to changes in product pricing and other terms of purchase by suppliers of product;

 

•

the ability of customers and suppliers to meet financial commitments due to us;

 

S-vii

•

changes in manufacturer preferences between direct sales and wholesale distribution;

 

•

changing trends in customer profiles and ordering patterns and our ability to meet customer demand for additional value-added services;

 

•

our ability to manage operating expenses and improve operational efficiencies in response to changing customer profiles;

 

•

our ability to meet performance targets specified by customer contracts under contractual commitments;

 

•

availability of and our ability to access special inventory buying opportunities;

 

•

the ability of business partners and financial institutions to perform their contractual responsibilities;

 

•

our ability to continue to obtain financing, obtain financing at reasonable rates and to manage financing costs and interest rate risk, and our ability to refinance, extend or repay our substantial indebtedness;

 

•

the risk that information systems are interrupted or damaged or fail for any extended period of time, that new information systems are not successfully implemented or integrated, or that there is a data security breach in our information systems;

 

•

the risk that a decline in business volume or profitability could result in an impairment of goodwill or other long-lived assets;

 

•

our ability to timely or adequately respond to technological advances in the medical supply industry;

 

•

the costs associated with and outcome of outstanding and any future litigation, including product and professional liability claims;

 

•

adverse changes in U.S. and foreign tax laws and the outcome of outstanding tax contingencies and legislative and tax proposals, including an increase in a tax reserve that we expect to record for the quarter ended September 30, 2020 in connection with the Internal Revenue Service’s audit of our 2015 and 2016 consolidated income tax returns described in Note 9 to our unaudited financial statements for the quarter ended June 30, 2020, which we expect will adversely impact our results of operations for the quarter;

 

•

our ability to successfully implement the expense reduction and productivity and efficiency increasing initiatives;

 

•

our ability to continue to comply with the terms and conditions of Byram Healthcare’s Corporate Integrity Agreement;

 

•

the potentially adverse impact of the United Kingdom’s withdrawal from the European Union; and

 

•

other factors detailed from time to time in the reports we file with the SEC, including those described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019, as updated and supplemented by Item 8.01 of our Current Report on Form 8-K filed with the SEC on March 27, 2020 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020.

 

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this prospectus supplement, the accompanying prospectus, information incorporated by reference herein or therein and any related free-writing prospectus primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and results of operations. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” herein and in our 2019 Annual Report, as updated and supplemented by Item 8.01 of our Current Report on Form 8-K filed with the SEC on March 27, 2020 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this prospectus supplement, the accompanying prospectus, information incorporated by reference herein or therein and any related free-writing prospectus. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the

 

S-viii

forward-looking statements. Please refer to the “Risk Factors” section in this prospectus supplement, the accompanying prospectus, in our 2019 Annual Report, as updated and supplemented by Item 8.01 of our Current Report on Form 8-K filed with the SEC on March 27, 2020 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, and in any of our subsequently filed quarterly reports and current reports with the SEC.

 

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date the statement is made. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

 

The forward-looking statements made in this prospectus supplement, the accompanying prospectus, information incorporated by reference herein or therein and any related free-writing prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this prospectus supplement, the accompanying prospectus, information incorporated by reference herein or therein and any related free-writing prospectus to reflect events or circumstances after the date of the statement or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

 

S-ix

 

S-1

 

S-2

 

S-3

 

S-4

 

S-5

 

S-6

 

S-7

 

S-8

 

9

 

S-10

RISK FACTORS

 

Investing in our Common Stock involves a high degree of risk. You should consider and read carefully all of the risks and uncertainties described below, as well as other information included or incorporated by reference in this prospectus supplement and accompanying prospectus, including the risks and uncertainties discussed under “Risk Factors” in our 2019 Annual Report as updated and supplemented by our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 and our consolidated financial statements and related notes incorporated by reference in this prospectus supplement, before making an investment decision. If any of the risks discussed in this prospectus supplement, the accompanying prospectus or incorporated by reference herein or therein actually occur, our business, financial condition and results of operations could be materially adversely affected. In such cases, the trading price of our Common Stock could decline and you may lose all or part of your investment. The risks described below or incorporated by reference herein are not the only risks that we face. The occurrence of any of the additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could also materially and adversely affect our business, financial condition or results of operations and you may lose all or part of your original investment. This prospectus supplement also contains forward-looking statements and estimates that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below or incorporated by reference herein. See “Cautionary Statement Concerning Forward-Looking Statements.” To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this section and in the section entitled “Risk Factors” in our 2019 Annual Report as updated and supplemented by our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, which is incorporated by reference in this prospectus supplement.

 

Risks Related to our Business

 

We are subject to risks related to public health crises or future outbreaks of health crises or other adverse public health developments such as the global pandemic associated with the 2019 novel coronavirus (COVID-19).

 

As a global healthcare solutions company, we are impacted by public health crises such as the global pandemic associated with COVID-19. The outbreak has significantly increased uncertainty and unpredictability of global economic conditions and the demand for and supply of raw materials and finished goods required for our operations. In addition, public and private sector policies and initiatives to reduce the transmission of COVID-19, such as the imposition of travel restrictions and the adoption of remote working, have impacted our operations. In these challenging and dynamic circumstances, we continue to work to protect our employees and the public, maintain business continuity and sustain our operations, including ensuring the safety and protection of the people who work in our production and distribution centers across the world, many of whom support the manufacturing and delivery of products that are critical in response to the global pandemic. We may restrict the operations of our production and distribution centers if we deem it necessary or if recommended or mandated by governmental authorities which would have an adverse impact on us. There is a risk that revenues will decrease ultimately resulting in less cash flow, we may see longer duration in receivables collection, and the need to expedite payments to important suppliers may grow. COVID-19 has impacted and may further impact our supply chains relative to global demand for our facial protection and protective apparel products. COVID-19 has also affected and may further affect the ability of suppliers and vendors to provide products and services to us or to do so at acceptable quality levels or prices. Some of these factors could increase the demand for our products, while others could decrease demand or make it more difficult for us to serve customers. For example, the significant reduction in elective surgical procedures, which began mid-March of 2020, resulted in a material negative impact on our revenue and profit for the quarter ended June 30, 2020. Any worsening of the COVID-19 pandemic or future outbreaks could result in similar reductions in elective surgical procedures or otherwise reduce demand for our products, any of which could have a material negative impact on our revenues and profit for the remainder of 2020 or future periods.

 

S-11

Although we have experienced significant growth in sales volumes for certain of our products (such as PPE) during the COVID-19 pandemic, as well as improved productivity and manufacturing output, there can be no assurance that such growth rates, increased sales volumes or other improvements will be maintained during or following the COVID-19 pandemic. We may also see a decline in such growth rates and sales volumes when the impact of the pandemic subsides and the healthcare system returns to a more normalized state. In particular, demand for such products may also decline as government-sponsored COVID response stimulus, relief and production initiatives, such as those under the DPA and the CARES Act, expire. An accelerated shift of demand away from certain of our products and services could also adversely impact our average selling prices, and our revenues and profit margins could suffer as a result.

 

Furthermore, COVID-19 has impacted and may further impact the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates, and interest rates. For example, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital. Due to the speed with which the situation is developing and the uncertainty of its duration, any future outbreaks, similar pandemics, the timing of recovery, travel restrictions, business closures or business disruptions, a recession, depression or other sustained adverse market event resulting from the spread of the COVID-19 and the effectiveness of actions taken in the United States and other countries to contain and treat the disease, we are not able at this time to predict the extent to which the COVID-19 pandemic, or any future outbreaks or similar pandemics, may have a material effect on our financial or operational results. However, the following adverse risks exist:

 

•

Actions by the United States government or other foreign government could affect our business. These actions include purchasing products that we make or sell, imposing new product standards or allowing the use of alternative products, instituting regulatory requirements to purchase only locally manufactured products, exercising control over manufacturing or distribution operations, taking trade actions including the imposition or removal of tariffs or import / export controls, subsidizing the supply of products, or other actions;

 

•

Quarantine decisions by public or private entities may influence our ability to operate or our ability to ship or receive products. For example, if shipping companies cease or reduce land or sea freight channels, raw material and finished good deliveries may be slowed or stopped;

 

•

Our customers may change their payment patterns or lose their ability to pay invoices, which could have a material adverse impact on our cash flow;

 

•

Our suppliers may increase pricing or impose new purchasing requirements, such as minimum purchase quantities or pay-in-advance payment terms, which could have a material adverse impact on our cash flow;

 

•

Raw materials or finished goods that we require for our operations may not be available, or pricing for such items may increase beyond the willingness of our customers to pay;

 

•

New competitors may enter our market, including both small and large scale suppliers;

 

•

COVID-19 illness among our workers in manufacturing or distribution operations could impact our operations or compel the closure of one or more facilities for an unknown period of time. Labor relations in our facilities related to COVID-19 could also negatively impact our operations;

 

•

We may invest in additional manufacturing capacity for which demand slows in the future, which could have a material adverse impact on our cash flow; and

 

•

Technology infrastructure failures could materially inhibit our operations that currently include a substantial portion of remote work. For example, voice or data line failures resulting from natural, manmade or cyber-attack could impair our ability to operate.

 

We have incurred additional costs to ensure we meet the needs of our customers, including increasing our workforce in order to produce or distribute certain essential products for our customers, providing personal

 

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protective equipment to our workforce, incremental shipping and transportation costs, incremental technology costs, and additional cleaning costs throughout our facilities. We expect to continue to incur additional costs, which may be significant as we continue to implement operational changes in response to this pandemic, any future outbreaks or similar pandemics. Further, our management is focused on mitigating COVID-19, which has required and will continue to require, a large investment of time and resources across our enterprise and will delay other value added services and strategic initiatives. Additionally, currently some of our teammates are working remotely. An extended period of remote work arrangements, and any worsening of the COVID-19 pandemic, or future outbreaks, could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business. If we do not respond appropriately to the pandemic, any future outbreaks or similar pandemics, or if customers do not perceive our response to be adequate for the United States or our international markets, we could suffer damage to our reputation and our brands, which could adversely affect our business.

 

The impact of COVID-19 may also exacerbate other risks discussed in this prospectus supplement and in Item 1A. Risk Factors in our Annual Report on Form 10-K as updated and supplemented by Item 8.01 of our Current Report on Form 8-K filed with the SEC on March 27, 2020 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, any of which could have a material effect on us. This situation is changing rapidly and additional impacts may arise that we are not aware of currently.

 

Risks Related to this Offering and Ownership of Our Common Stock

 

The market price for our Common Stock may be highly volatile.

 

The market price for our Common Stock may be highly volatile. A variety of factors may have a significant impact on the market price of our Common Stock, including, but not limited to:

 

•

the publication of earnings estimates or other research reports and speculation in the press or investment community;

 

•

the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

 

•

changes in our industry and competitors;

 

•

changes in government or legislation;

 

•

changes in our board of directors or management;

 

•

our financial condition, results of operations and cash flows and prospects;

 

•

activism by any single large shareholder or combination of shareholders;

 

•

lawsuits threatened or filed against us;

 

•

any future issuances of our Common Stock, which may include primary offerings for cash, stock splits, issuances in connection with business acquisitions, issuances of restricted stock/units and the grant or exercise of stock options from time to time;

 

•

trading volume of our Common Stock;

 

•

general market and economic conditions;

 

•

any outbreak or escalation of hostilities in areas where we do business;

 

•

impact of the COVID-19 pandemic, any worsening of the COVID-19 pandemic, or future outbreaks and any future pandemics; and

 

•

the other factors described under “Risk Factors” in our 2019 Annual Report as updated and supplemented by Item 8.01 of our Current Report on Form 8-K filed with the SEC on March 27, 2020 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, and “Cautionary Statement Concerning Forward-Looking Statements” in this prospectus supplement.

 

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In addition, the NYSE can experience price and volume fluctuations that can be unrelated or disproportionate to the operating performance of the companies listed on NYSE. Broad market and industry factors may negatively affect the market price of our Common Stock, regardless of actual operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against companies. This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which could have a material adverse effect on our business.

 

If securities or industry analysts publish negative reports about our business, our share price and trading volume could decline.

 

The market price for our Common Stock depends in part on the research and reports that securities or industry analysts publish about us or our business, our market and our competitors. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

 

Future sales of the Common Stock by us, or the perception in the public markets that these sales may occur, may depress the share price.

 

Sales of a substantial number of shares of Common Stock in the public market after this offering, or the perception that these sales could occur, could cause the market price of the Common Stock to decline and may make it more difficult for you to sell your shares at a time and price that you deem appropriate.

 

The company, its executive officers and directors have entered into lock-up agreements with the underwriters under which the company and they have agreed, subject to certain exceptions, not to sell, directly or indirectly, any of their shares of Common Stock without the permission of Citigroup Global Markets Inc., BofA Securities, Inc. and J.P. Morgan Securities LLC for a period of 90 days following the date of this prospectus supplement. We refer to such period as the lock-up period. When the lock-up period expires, we, our executive officers and directors and certain of the company’s stockholders will be able to sell our common stock in the public market, subject to compliance with applicable securities laws restrictions. In addition, Citigroup Global Markets Inc., BofA Securities, Inc. and J.P. Morgan Securities LLC may, in their sole discretion, release all or some portion of the Common Stock subject to lock-up agreements at any time and for any reason. Sales of a substantial number of such Common Stock upon expiration of the lock-up or otherwise, the perception that such sales may occur, or early release of these agreements, could cause the market price of our Common Stock to fall.

 

Your percentage ownership may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise.

 

Our amended and restated certificate of incorporation allows us to issue up to 200 million shares of Common Stock. Any shares of Common Stock that we issue, including under our share-based compensation plan or other equity incentive plans that we may adopt in the future or in connection with an acquisition or otherwise, would dilute the percentage ownership held by the investors who purchase shares of Common Stock in this offering.

 

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Moreover, we will require additional capital in the future to continue our planned operations. For example, we have an at-the-market equity financing program in place pursuant to which we may sell up to $50 million of Common Stock from time to time. To the extent we raise additional capital by issuing additional shares of our Common Stock or other securities convertible into, or exchangeable for, our Common Stock, you may experience substantial dilution. We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to those of existing stockholders. The price per share at which we sell additional shares of our Common Stock, or securities convertible into, or exchangeable for, Common Stock, in future transactions may be higher or lower than the price per share paid by investors in this offering.

 

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USE OF PROCEEDS

 

The net proceeds from this offering are expected to be approximately $             million (or $             million if the underwriters exercise their option to acquire additional shares of Common Stock in full) after deducting estimated fees and expenses, including the underwriters’ discounts and commissions. We intend to use all or substantially all of the net proceeds from this offering to partially repay our Term A Loans. Affiliates of certain of the underwriters, including the Representatives, are lenders under our Term A Loans. As a result, affiliates of certain of the underwriters, including the Representatives, may receive 5% or more of the net proceeds from this offering. See “Underwriting (Conflicts of Interest)—Conflicts of Interest.”

 

Term A Loans mature on July 27, 2022. As of June 30, 2020, our credit spread on Term A Loans was Eurocurrency Rate (as defined in the Credit Agreement) plus 4.25%.

 

Pending application of the net proceeds for the purposes described above, we may temporarily invest the net proceeds in short-term government securities, short-term money market funds and/or bank certificates of deposit. We intend to use any remaining proceeds for general corporate purposes.

 

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CAPITALIZATION

 

The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2020:

 

•

on an actual basis; and

 

•

on an as adjusted basis, giving effect to this offering (assuming no exercise of the underwriters’ option to acquire additional shares of Common Stock) and the use of proceeds therefrom (assuming we use all of the net proceeds to partially repay our Term A Loans), assuming a public offering price of $21.69 per share, the closing price of our Common Stock on the New York Stock Exchange on September 28, 2020, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

You should read this table together with “Use of Proceeds” included in this prospectus supplement and the consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2019 Annual Report and Quarterly Reports, each of which is incorporated by reference into this prospectus supplement and the accompanying prospectus.

 

		As of June 30, 2020
($ in thousands, except per share amounts)		Actual				As Adjusted
Cash and cash equivalents		$	101,276			$
Debt:
3.875% Senior Notes due September 2021			178,510				178,510
4.375% Senior Notes due December 2024			244,619				244,619
Term A Loans due July 2022			207,206
Term B Loan due April 2025			478,729				478,729
Revolver(2)			130,000				130,000
Receivables Securitization Program			147,339				147,339
Finance leases and other			12,251				12,251
Total debt			1,398,654
Less current maturities			(128,800	)			(128,800	)
Total long-term debt			1,269,854
Equity:
Common stock, par value $2 per share; authorized—200,000 shares; issued and outstanding—63,737 shares, actual and 70,653 shares, as adjusted(1)			127,474
Paid-in capital			258,733
Accumulated other comprehensive loss			(61,585	)			(61,585	)
Retained earnings			70,540				70,540
Total equity			395,162
Total capitalization		$	1,665,016			$

 

(1)

Unless otherwise indicated, in this prospectus supplement the number of shares of our Common Stock to be outstanding immediately after this offering is based on 63,765,193 shares of Common Stock outstanding as of September 28, 2020. These numbers:

 

•

assume no exercise by the underwriters of their option to acquire additional shares of Common Stock; and

 

•

exclude 4,916,810 share of Common Stock issuable upon settlement of outstanding stock options and other equity awards, including performance shares.

 

(2)

As of June 30, 2020, we had $256.1 million available for borrowing under our revolving credit facility, after giving effect to $13.9 million of outstanding letters of credit.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES FOR NON-U.S. HOLDERS

 

The following is a general summary of certain U.S. federal income tax considerations with respect to the purchase, ownership, and disposition of our Common Stock issued pursuant to this offering by non-U.S. holders (as defined below), but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), proposed, temporary, and final Treasury regulations promulgated or proposed thereunder, judicial decisions, and published rulings and administrative pronouncements of the Internal Revenue Service (“IRS”), in each case in effect as of the date hereof. These authorities are subject to differing interpretations and may be changed, possibly with retroactive effect, so as to result in U.S. federal income tax consequences different from those set forth below. We have not sought, and will not seek, any rulings from the IRS regarding the matters discussed below, and there can be no assurance that the IRS will not take a position contrary to those discussed below or that any position taken by the IRS will not be sustained.

 

This summary is limited to non-U.S. holders who purchase our Common Stock pursuant to this offering and who hold shares of our Common Stock as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment purposes). This summary does not address the tax consequences arising under the laws of any non-U.S., state, or local jurisdiction or any aspect of U.S. federal tax law other than income taxation (such as U.S. federal gift and estate tax laws) or the effect, if any, of the alternative minimum tax, base erosion and anti-abuse tax, the Medicare contribution tax imposed on net investment income, or the rules with respect to conforming the timing of income accruals to financial statements pursuant to Section 451 of the Code. In addition, this discussion does not address tax considerations applicable to a non-U.S. holder’s particular circumstances or to a non-U.S. holder that may be subject to special tax rules, including, without limitation:

 

•

banks, insurance companies, or other financial institutions;

 

•

partnerships or other entities or arrangements classified as partnerships for U.S. federal income tax purposes and investors therein;

 

•

tax-exempt organizations or governmental organizations;

 

•

controlled foreign corporations, passive foreign investment companies, and corporations that accumulate earnings to avoid U.S. federal income tax;

 

•

traders, brokers or dealers in securities, commodities or currencies;

 

•

traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

 

•

U.S. expatriates and former citizens or former long-term residents of the United States;

 

•

persons who hold our Common Stock as a position in a hedging transaction, “straddle,” “conversion transaction,” or other risk reduction transaction;

 

•

persons who hold or receive our Common Stock pursuant to the exercise of any employee stock option or otherwise as compensation;

 

•

tax-qualified retirement plans;

 

•

persons with a functional currency other than the U.S. dollar;

 

•

persons that own or have owned (directly, indirectly or constructively) 5% or more of our Common Stock outstanding (by vote or value) for U.S. federal income tax purposes;

 

•

qualified foreign pension funds as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by qualified foreign pension funds; and

 

•

persons deemed to sell our Common Stock under the constructive sale provisions of the Code.

 

In addition, if a partnership (including an entity or arrangement classified as a partnership for U.S. federal income tax purposes) holds our Common Stock, the tax treatment of a partner generally will depend on the status

 

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of the partner and upon the activities of the partner or partnership. Accordingly, partnerships that hold our Common Stock, and partners in such partnerships, should consult their tax advisors as to the particular U.S. federal income tax consequences applicable to them.

 

THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATION PURPOSES ONLY, IS NOT TAX ADVICE, AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER’S PARTICULAR SITUATION. YOU SHOULD CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX RULES, U.S. ALTERNATIVE MINIMUM TAX RULES, OR UNDER THE LAWS OF ANY NON-U.S., STATE, OR LOCAL TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.

 

Non-U.S. Holder Defined

 

For purposes of this discussion, you are a “non-U.S. holder” if you are a beneficial owner of our Common Stock and you are neither a “U.S. person” nor an entity or arrangement classified as a partnership for U.S. federal income tax purposes. A U.S. person is any person that, for U.S. federal income tax purposes, is or is treated as:

 

•

an individual who is a citizen or resident of the United States;

 

•

a corporation or other entity taxable as a corporation for U.S. federal income tax purposes created or organized (or deemed to be created or organized) in or under the laws of the United States, any state thereof, or the District of Columbia;

 

•

an estate whose income is subject to U.S. federal income tax regardless of its source; or

 

•

a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more “United States persons” (as defined in the Code) who have the authority to control all substantial decisions of the trust or (y) which has a valid election in effect under applicable Treasury regulations to be treated as a United States person for U.S. federal income tax purposes.

 

Distributions

 

We do not expect to make any distributions for the foreseeable future. However, if we do make distributions on our Common Stock, other than certain pro rata distributions of Common Stock, those distributions (and certain redemptions that are treated as distributions with respect to common stock) will generally constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent distributions exceed both our current and our accumulated earnings and profits, they will first constitute a tax-free return of capital and will reduce your adjusted tax basis in our Common Stock (determined on a share by share basis), but not below zero, and then any excess will be treated as capital gain from the sale of our Common Stock, subject to the tax treatment described below in “—Gain on Sale or Other Taxable Disposition of Common Stock.”

 

Any dividend paid to you generally will be subject to U.S. federal withholding tax at a rate of 30% on the gross amount of the dividend, or such lower rate as may be specified by an applicable income tax treaty, except to the extent that the dividends are “effectively connected” dividends, as described below. In order to claim treaty benefits to which you are entitled, you must provide us with a properly completed IRS Form W-8BEN or W-8BEN-E (or other applicable or successor form) certifying under penalty of perjury that you are not a “United States person” as defined under the Code and qualify for the reduced treaty rate. If you do not timely furnish the required documentation, but are otherwise eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty, you may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. If you hold our Common Stock through a financial institution or other agent acting

 

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on your behalf, you will be required to provide appropriate documentation to the agent, who then will be required to provide certification to us or our paying agent (subject to certain exceptions), either directly or through other intermediaries. This certification must be provided to us (or, if applicable, our paying agent) prior to the payment to you of any dividends and may be required to be updated periodically. Non-U.S. holders should consult their tax advisors regarding their entitlement to benefits under an applicable income tax treaty and the requirements for claiming any such benefits.

 

We may withhold up to 30% of the gross amount of the entire distribution even if such distribution is greater than the amount constituting a dividend, as described above, to the extent provided for in the Treasury Regulations. If tax is withheld on the amount of a distribution in excess of the amount constituting a dividend, then a refund of any such excess amounts may be obtained if a claim for refund is timely filed with the IRS.

 

Dividends received by you that are effectively connected with your conduct of a trade or business within the United States (and, if an applicable income tax treaty requires, attributable to a permanent establishment or fixed base maintained by you in the United States) generally are exempt from the U.S. federal withholding tax described above. In order to claim this exemption, you must provide us (or, if applicable, our paying agent or other relevant withholding agent) with an IRS Form W-8ECI (or a successor form) properly certifying that the dividends are effectively connected with your conduct of a trade or business within the United States. Such effectively connected dividends, although not subject to U.S. federal withholding tax, are generally taxed at the same U.S. federal income tax rates applicable to U.S. persons, net of certain deductions and credits (except as provided by an applicable income tax treaty). In addition, if you are a corporate non-U.S. holder, you may also be subject to a branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on your effectively connected earnings and profits for the taxable year that are attributable to such dividends, as adjusted for certain items.

 

Any distributions we make to a non-U.S. holder with respect to its shares of our Common Stock will also be subject to the rules discussed below under the headings “Backup Withholding and Information Reporting” and “Additional Withholding Tax on Payments Made to Foreign Accounts.”

 

Gain on Sale or Other Taxable Disposition of Common Stock

 

Subject to the discussions below regarding FATCA and backup withholding, you generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other taxable disposition of our Common Stock unless:

 

•

the gain is effectively connected with your conduct of a U.S. trade or business (and, if an applicable income tax treaty requires, the gain is attributable to a permanent establishment or fixed base maintained by you in the United States);

 

•

you are an individual who is present in the United States for a period or periods aggregating 183 days or more during the taxable year in which the sale or disposition occurs and certain other conditions are met; or

 

•

our Common Stock constitutes a U.S. real property interest by reason of our status as a “United States real property holding corporation,” or a “USRPHC,” for U.S. federal income tax purposes, at any time during the shorter of the five-year period ending on the date of the sale or other taxable disposition of, or your holding period for, our Common Stock, and certain other conditions are met.

 

If you are a non-U.S. holder described in the first bullet above, you generally will be subject to U.S. federal income tax on the gain derived from the sale or other taxable disposition (net of certain deductions or credits) under the U.S. federal income tax rates generally applicable to U.S. persons (except as provided by an applicable income tax treaty), and corporate non-U.S. holders described in the first bullet above also may be subject to branch profits tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

 

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If you are an individual non-U.S. holder described in the second bullet above, you will be subject to U.S. federal income tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on the gain derived from the sale or other taxable disposition, which may be offset by certain U.S. source capital losses for that taxable year (even though you are not considered a resident of the United States), provided that you have timely met certain requirements, including filing U.S. federal income tax returns with respect to such losses.

 

With respect to the third bullet above, we have not determined whether we are or have been a USRPHC for U.S. federal income tax purposes. In general, we would be a USRPHC if our “U.S. real property interests” comprised at least 50% of the sum of the fair market value of our worldwide real property interests plus our other assets used or held for use in our trade or business. Even if we were, during the relevant period, are, or were to become a USRPHC, gain arising from the sale or other taxable disposition by a non-U.S. holder of our Common Stock would not be subject to U.S. federal income tax if our Common Stock is “regularly traded” (within the meaning of applicable Treasury regulations) on an established securities market, and such non-U.S. holder has owned, actually or constructively, five percent or less of our Common Stock at all times during the applicable period described above. If we are or were to become a USRPHC and our Common Stock were not considered to be “regularly traded” on an established securities market during the calendar year in which the relevant sale or other taxable disposition by a non-U.S. holder occurs, such non-U.S. holder (regardless of the percentage of stock owned) would be subject to U.S. federal income tax on a sale or other taxable disposition of our Common Stock and a 15% withholding tax would apply to the gross proceeds from such disposition.

 

Non-U.S. holders should consult their own tax advisors regarding the application of these rules to them, including if we are or become a USRPHC, and the potential application of any income tax treaties that may provide for different rules.

 

Any sale or other disposition with respect to a non-U.S. holder’s shares of our Common Stock will also be subject to the rules discussed below under the headings “Backup Withholding and Information Reporting” and “Additional Withholding Tax on Payments Made to Foreign Accounts.”

 

Backup Withholding and Information Reporting

 

Payments of dividends on our Common Stock will not be subject to backup withholding, provided you either certify under penalty of perjury your non-U.S. status, such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E, or W-8ECI (or a successor form), or otherwise establish an exemption. However, information returns are required to be filed with the IRS in connection with any dividends on our Common Stock paid to you, regardless of whether any tax was actually withheld. In addition, proceeds of the sale or other taxable disposition of our Common Stock within the United States or conducted through certain U.S.-related brokers generally will not be subject to backup withholding or information reporting, if the applicable withholding agent receives the certification described above or you otherwise establish an exemption. Proceeds of a disposition of our Common Stock conducted through a non-U.S. office of a non-U.S. broker generally will not be subject to backup withholding or information reporting.

 

Copies of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or agreement to tax authorities in your country of residence, establishment, or organization.

 

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or credit against a non-U.S. holder’s U.S. federal income tax liability, provided that the non-U.S. holder timely files the appropriate claim with the IRS and the required information is furnished to the IRS in a timely manner. Non-U.S. holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them.

 

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Additional Withholding Tax on Payments Made to Foreign Accounts

 

Legislation commonly known as the Foreign Account Tax Compliance Act and the rules and regulations promulgated thereunder, or collectively, “FATCA,” impose withholding tax at a rate of 30% on dividends on our Common Stock paid to a “foreign financial institution” (as specially defined under these rules), unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding the U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or otherwise establishes an exemption. FATCA also generally imposes a U.S. federal withholding tax of 30% on dividends on our Common Stock paid to a “non-financial foreign entity” (as specially defined for purposes of these rules) unless such entity provides the withholding agent with a certification identifying certain substantial direct and indirect U.S. owners of the entity, certifies that there are none or otherwise establishes an exemption. Additionally, although FATCA withholding may also apply to gross proceeds of a disposition of the Common Stock, recently proposed regulations, on which taxpayers are permitted to rely until final regulations are issued, eliminate withholding on such gross proceeds. There can be no assurance that these proposed regulations will be finalized in their present form. The withholding provisions under FATCA generally apply to all withholdable payments (including dividends on our Common Stock) without regard to whether the beneficial owner of the payment would otherwise be entitled to an exemption from withholding tax pursuant to an applicable tax treaty with the United States or U.S. domestic law. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. An intergovernmental agreement between the United States and an applicable foreign country may modify the requirements described in this paragraph. Non-U.S. holders should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our Common Stock.

 

THE PRECEDING DISCUSSION OF U.S. FEDERAL TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY. THIS DISCUSSION IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, HOLDING, AND DISPOSING OF OUR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.

 

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UNDERWRITING (CONFLICTS OF INTEREST)

 

Citigroup Global Markets Inc., BofA Securities, Inc. and J.P. Morgan Securities LLC are acting as joint book-running managers of the offering and as representatives (the “Representatives”) of the underwriters named below. Subject to the terms and conditions stated in the underwriting agreement dated the date of this prospectus supplement, each underwriter named below has severally agreed to purchase, and we have agreed to sell to that underwriter, the number of shares set forth opposite the underwriter’s name.

 

Underwriter		Number of Shares
Citigroup Global Markets Inc.
BofA Securities, Inc.
J.P. Morgan Securities LLC
Robert W. Baird & Co. Incorporated
Total

 

The underwriting agreement provides that the obligations of the underwriters to purchase the shares included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all the shares (other than those covered by the underwriters’ option to purchase additional shares described below) if they purchase any of the shares.

 

Shares sold by the underwriters to the public will initially be offered at the public offering price set forth on the cover of this prospectus supplement. Any shares sold by the underwriters to securities dealers may be sold at a discount from the public offering price not to exceed $             per share. If all the shares are not sold at the initial offering price, the underwriters may change the offering price and the other selling terms.

 

If the underwriters sell more shares than the total number set forth in the table above, we have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus supplement, to purchase up to              additional shares at the public offering price less the underwriting discount. To the extent the option is exercised, each underwriter must purchase a number of additional shares approximately proportionate to that underwriter’s initial purchase commitment. Any shares issued or sold under the option will be issued and sold on the same terms and conditions as the other shares that are the subject of this offering.

 

We and our officers and directors have agreed that, for a period of 90 days from the date of the underwriting agreement (the “Restricted Period”), we and they will not, without the prior written consent of the Representatives, dispose of or hedge any shares or any securities convertible into or exchangeable for our Common Stock. The Representatives, in their sole discretion may release any of the securities subject to these lock-up agreements at any time without notice.

 

The restrictions described in the immediately preceding paragraph do not apply to us with respect to (a) issues and sales of Common Stock, options or other equity awards pursuant to any equity incentive plan, inducement plan, employee stock option plan, stock ownership plan or dividend reinvestment plan of the Company in effect at the date of this prospectus supplement and (b) issues of Common Stock issuable upon the conversion of securities or the exercise of warrants outstanding at the date of this prospectus supplement.

 

The restrictions described in the second preceding paragraph do not apply to our officers and directors with respect to:

 

(a)

transfer of shares of Common Stock:

 

(i)

as a bona fide gift or gifts, or for bona fide estate planning purposes,

 

(ii)

by will or intestacy,

 

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(iii)

to any trust for the direct or indirect benefit of the securityholder or the immediate family of the securityholder, or if the securityholder is a trust, to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust,

 

(iv)

to a partnership, limited liability company or other entity of which the securityholder and the immediate family of the securityholder are the legal and beneficial owner of all of the outstanding equity securities or similar interests,

 

(v)

to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under paragraphs (i) through (iv) above,

 

(vi)

if the securityholder is a corporation, partnership, limited liability company, trust or other business entity, (A) to another corporation, partnership, limited liability company, trust or other business entity that is an affiliate (as defined in Rule 405 promulgated under the Securities Act) of the securityholder, or to any investment fund or other entity controlling, controlled by, managing or managed by or under common control with the securityholder or affiliates of the securityholder (including, for the avoidance of doubt, where the securityholder is a partnership, to its general partner or a successor partnership or fund, or any other funds managed by such partnership), or (B) as part of a distribution to members or shareholders of the securityholder,

 

(vii)

by operation of law, such as pursuant to a qualified domestic order, divorce settlement, divorce decree or separation agreement,

 

(viii)

to the Company from an employee of the Company upon death, disability or termination of employment, in each case, of such employee,

 

(ix)

as part of a sale of the securityholder’s shares of Common Stock acquired in open market transactions after the closing date for this offering,

 

(x)

to the Company in connection with the vesting, settlement, or exercise of restricted stock units, options, warrants or other rights to purchase shares of Common Stock (including, in each case, by way of “net” or “cashless” exercise), including for the payment of exercise price and tax and remittance payments due as a result of the vesting, settlement, or exercise of such restricted stock units, options, warrants or rights, provided that any such shares of Common Stock received upon such exercise, vesting or settlement will be subject to the terms of the lock-up agreement, and provided further that any such restricted stock units, options, warrants or rights are held by the securityholder pursuant to an agreement or equity awards granted under a stock incentive plan or other equity award plan, each such agreement or plan which is described in the Registration Statement, the Disclosure Package and the Final Prospectus (as such terms are defined in the lock-up agreement), or

 

(xi)

pursuant to a bona fide third-party tender offer, merger, consolidation or other similar transaction that is approved by the board of directors of the Company and made to all holders of the Company’s capital stock involving a change of control (as defined in the lock-up agreement) of the Company; provided that in the event that such tender offer, merger, consolidation or other similar transaction is not completed, the securityholder’s shares of Common Stock will remain subject to the provisions of the lock-up agreement;

 

provided that (A) in the case of any transfer or distribution pursuant to paragraph (a)(i), (ii), (iii), (iv), (v), (vi) and (vii), such transfer will not involve a disposition for value and each donee, devisee, transferee or distributee will execute and deliver to the Representatives a lock-up letter in the form of the lock-up agreement, (B) in the case of any transfer or distribution pursuant to paragraph (a)(i), (ii), (iii), (iv), (v), (vi), (ix) and (x), no filing by any party (donor, donee, devisee, transferor, transferee, distributor or distributee) under the Exchange Act, or other public announcement shall be required or will be made voluntarily in connection with such transfer or distribution (other than a filing on a Form 5 made after the expiration of the Restricted Period referred to above) and (C) in the case of any transfer or distribution pursuant to paragraph

 

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(a)(vii) and (viii) it will be a condition to such transfer that no public filing, report or announcement will be voluntarily made and if any filing under Section 16(a) of the Exchange Act, or other public filing, report or announcement reporting a reduction in beneficial ownership of shares of Common Stock in connection with such transfer or distribution shall be legally required during the Restricted Period, such filing, report or announcement will clearly indicate in the footnotes thereto the nature and conditions of such transfer;

 

(b)

exercise outstanding options, settle restricted stock units or other equity awards or exercise warrants pursuant to plans described in the Registration Statement, the Disclosure Package and the Final Prospectus; provided that any shares of Common Stock received upon such exercise, vesting or settlement will be subject to the terms of the lock-up agreement;

 

(c)

convert outstanding preferred stock, warrants to acquire preferred stock or convertible securities into shares of Common Stock or warrants to acquire shares of Common Stock; provided that any such shares of Common Stock or warrants received upon such conversion will be subject to the terms of the lock-up agreement;

 

(d)

establish trading plans pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of Common Stock; provided that (1) such plans do not provide for the transfer of shares of Common Stock during the Restricted Period and (2) no filing by any party under the Exchange Act or other public announcement will be required or made voluntarily in connection with such trading plan; and

 

(e)

transfer or sell Common Stock pursuant to any Rule 10b5-1 plan that has been entered into by the securityholder prior to the date of the lock-up agreement, provided that such Rule 10b5-1 plan will not be amended or otherwise modified during the Restricted Period, and provided further that no public announcement or filing under Section 16(a) of the Exchange Act, or any other public filing or disclosure will be made by the securityholder during the Restricted Period, unless such filing is required and indicates in the footnotes thereto that the transfer or disposition is made pursuant to a trading plan pursuant to Rule 10b5-1.

 

The shares are listed on the New York Stock Exchange under the symbol “OMI.”

 

The following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares.

 

		No Exercise				Full Exercise
Per share		$				$
Total		$				$

 

We estimate that the total expenses of this offering payable by us will be $            .

 

In connection with the offering, the underwriters may purchase and sell shares in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, which may include purchases pursuant to the underwriters’ option to purchase additional shares, and stabilizing purchases.

 

•

Short sales involve secondary market sales by the underwriters of a greater number of shares than they are required to purchase in the offering.

 

•

“Covered” short sales are sales of shares in an amount up to the number of shares represented by the underwriters’ option to purchase additional shares.

 

•

“Naked” short sales are sales of shares in an amount in excess of the number of shares represented by the underwriters’ option to purchase additional shares.

 

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