MTS Announces Proposed Public Offering Of Common Stock And Tangible Equity Units

EDEN PRAIRIE, MN, June 7, 2016 /PRNewswire/ -- MTS Systems Corporation (Nasdaq: MTSC), a leading global supplier of high-performance test systems and position sensors, announced today the commencement of registered underwritten public offerings of the Company's Common Stock and tangible equity units. The proposed offerings consist of 1,500,000 shares of Common Stock and 1,000,000 tangible equity units, each tangible equity unit with a stated amount of $100. The completion of the Common Stock offering is not contingent on the completion of the tangible equity units offering, and the completion of the tangible equity units offering is not contingent on the completion of the Common Stock offering, and neither offering is contingent on the completion of the PCB Group, Inc. ("PCB") acquisition.

Each tangible equity unit will consist 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 for shares of Common Stock (subject to postponement in limited circumstances). The amortizing notes will pay equal quarterly installments that will constitute a payment of interest and a partial repayment of principal. The amortizing notes will have a final installment payment date of July 1, 2019 and will be unsecured senior obligations of the Company.

In connection with the pricing of the tangible equity units, the Company expects to enter into 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 the Company's Common Stock upon any settlement of the purchase contracts, with such reduction subject to a cap.

In connection with establishing their initial hedge positions with respect to the capped call transactions, we expect that the option counterparties (and/or their respective affiliates) will enter into various derivative transactions with respect to the Company's Common Stock concurrently with or shortly after the pricing of the tangible equity units and the option counterparties (and/or their respective affiliates) may unwind these various derivative transactions and purchase shares of the Company's Common Stock in open market transactions shortly following the pricing of the tangible equity units. These activities could have the effect of increasing, or reducing the size of a decline in, the market price of the Company's Common Stock or the trading price of the purchase contracts or tangible equity units concurrently with, or shortly following, the pricing of the tangible equity units.

The Company intends to use a portion of the net proceeds of the tangible equity units to fund the cost of the capped call transactions and the remaining net proceeds of the offerings to partially fund the acquisition of PCB. If the acquisition of PCB is not completed, the Company intends to use the net proceeds from these offerings for general corporate purposes, including strategic investments and acquisitions. If the tangible equity units offering is completed but the acquisition of PCB is not consummated, the Company may redeem all, but not less than all, of the outstanding purchase contracts by issuing a redemption notice. The Company will pay a redemption price at that time in cash or in shares of Common Stock in accordance with the terms of the purchase contracts. If the Company elects to redeem the purchase contracts, it may be required by the holders thereof to repurchase the amortizing notes at the repurchase price set forth in the amortizing notes.

J.P. Morgan Securities LLC and Wells Fargo Securities, LLC are serving as the joint book-running managers for the Common Stock offering and for the tangible equity units offering. The shares of Common Stock and tangible equity units, including the component stock purchase contracts and amortizing notes, will be issued pursuant to an effective registration statement previously filed with the Securities and Exchange Commission (the "SEC") on Form S-3 and available for review on the SEC's website at www.sec.gov. A preliminary prospectus supplement related to the offering of Common Stock and a preliminary prospectus supplement related to the offering of tangible equity units will be filed with the SEC and will be available on the SEC's website at www.sec.gov.

Copies of the preliminary prospectus supplement and the accompanying base prospectus related to the Common Stock and the preliminary 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 $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 Securities and Exchange Commission ("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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