Claritev Corporation (CTEV) Earnings Call Transcript & Summary

Okay, everyone, good morning. I think we're going to go ahead and get started. Thank you for joining the call, [Operator Instructions] I'd now like to turn the call over to Dave.

Thank you, Shawna, and good morning, everyone. We filed a release this morning talking about the registration statement that we filed on Thursday. The purpose really of this call is to clarify our recent filing on Form S-3 we made on November 4, 2021, last Thursday, relating to the resale shelf registration statement. This is a customary resale shelf registration that is filed in connection with the convertible notes of the kind we have outstanding. We were required to take this action at this time by the registration rights agreement entered into at the time of the issuance of the convertible notes last year, October 2020, related to the transaction that we closed on a October 8, 2020. We don't know whether if or when any of these note holders may convert their share -- their notes into shares. But note that their effective conversion price is $13 per share, which if you are using Friday's closing price and if all $1.3 billion of our convertible notes converted up into shares, that would be worth approximately $396 million. We have no knowledge from anyone intending to sell, and the math suggested it would not be a rational action, given a $13 conversion price and the current price of our stock. By the way, these notes do not mature until 2027 and are convertible at any time prior to maturity. As most of you know, we just had our earnings release, and we have nothing more to add at this time. With that, Shawna, we will open it up for any questions.

[Operator Instructions]

I guess -- this is David Common at JPMorgan. Perhaps I could kick it off with just some housekeeping questions, make sure we're on the same page. Could you just tell us what drove the timing for the filing? For example, why did it not go either prior to earnings or alongside earnings? Maybe just tell us when it goes effective. And then I had a follow-on, on the economics that Dave just outlined, please.

Yes. We were required in the documents that were part of our closing transaction in October of 2020, which included this $1.3 billion of convertible notes to file a shelf registration statement for the registration of any underlying securities as a result of the conversion. That was required in the documents regardless of where the price of the stock was or anything else. We had a specific guideline as to when these had to be filed. Our attorneys made the decision that they needed to be filed this past week and be effective in the very near future to totally be in compliance with the documents that were signed late last summer.

Okay. So it sounds like it's just what we're used to in our market, which is routine registration rights. You touched on the economics there, but can I just also understand -- I mean, normally, we don't think of convert holders as converting before they really have to because the coupon is more remunerative than swapping into shares. But so I do the math right, is the 100 million shares that they would be entitled to in total on conversion? I did $1.3 billion by $13.

That's approximately correct, David. The conversion price is approximately $13 a share. We have $1.3 billion of convertible debt outstanding, which equates to about 100 million shares. And so if they -- if everyone converted their debt to shares, essentially based on the closing price, it'd be slightly under $400 million. They would be exchanging $1.3 billion of debt for $400 million of stock, which, as I said, the math suggests that, that would not be a rational decision, given that there's still 6 years before these convertible notes mature.

Right. And they're getting almost $80 million a year in interest. So would be -- giving up a 20% yield.

There about.

[Operator Instructions]

I'm just a random investor. Can you -- I don't know if it's said on this call, but can you speak to the share buyback, and if there's any updates on that?

We have nothing more to add on the share buyback that, obviously, we talked about in the earnings call last week. There's nothing more to add at this time.

This is Rishi from Barclays. I just want to confirm that you're continuing to pay -- we'll continue to pay cash interest on those converts?

We have paid cash interest on the convertible debt at a 6% rate. And I see no reason that we will not continue to do that into the long foreseeable future, roughly over the life of the debt.

[Operator Instructions]

Again, thank you for your support. As we said, we were required to take this action by the registration rights agreements that we entered into at the time of the transaction in last October. And we wanted to use this call this morning to certify exactly the purpose of that expected [indiscernible]. Thank you.

Thank you.