Turning Point Brands Announces Proposed Private Offering of $125 Million of Convertible Senior Notes

Turning Point Brands, Inc. (the “Company”) (NYSE: TPB), a leading provider of other tobacco products and adult consumer alternatives, announced that it intends to offer, subject to market conditions and other factors, $125,000,000 in aggregate principal amount of convertible senior notes due 2024 (the “notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The Company also intends to grant the initial purchasers of the notes an option to purchase up to an additional $18,750,000 principal amount of notes.

The notes will be senior unsecured obligations of the Company and will accrue interest payable semiannually in arrears. The notes will be convertible into cash, shares of the Company’s voting common stock (the “common stock”) or a combination thereof, at the Company’s election. The interest rate, initial conversion rate, repurchase or redemption rights and other terms of the notes will be determined at the time of pricing of the offering.

The Company intends to use a portion of the net proceeds from the offering to repay all amounts outstanding under its second lien credit agreement, pay the cost of the capped call transactions described below, which may or may not occur, and for general corporate purposes, including acquisitions that are yet to be identified.

In connection with the pricing of the notes, the Company expects to enter into capped call transactions with one or more financial institutions (the option counterparties). The capped call transactions are expected generally to reduce potential dilution to holders of the Company’s common stock upon any conversion of the notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. If the initial purchasers exercise their option to purchase additional notes, the Company expects to enter into additional capped call transactions with the option counterparties.

The Company expects, in connection with establishing their initial hedges of the capped call transactions, the option counterparties and/or their affiliates will purchase shares of the Company’s common stock and/or enter into various derivative transactions with respect to the Company’s common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of the Company’s common stock or the notes at that time.