MF Global greenshoe exercised, convertibles lifted to $287.5 million

By Devika Patel

Knoxville, Tenn., Feb. 11 - Underwriters for MF Global Holdings Ltd.'s offering of 1.875% five-year convertible senior notes exercised their over-allotment option in full for $37.5 million more of the convertibles, increasing the size of the issue to $287.5 million, the company said in an 8-K filed Friday with the Securities and Exchange Commission.

As previously reported, the company sold the convertibles at par on Feb. 7 in a registered, off-the-shelf offering via joint bookrunners Goldman Sachs & Co., Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. The co-managers were Bank of America Merrill Lynch, J.P. Morgan Securities LLC, RBS Securities Inc. and Sandler O'Neill + Partners, LP.

The convertibles have an initial conversion premium of 27.5% and an initial conversion price of $10.37, which equals a conversion ratio of 96.4716 shares per note.

The notes are non-callable for life. They are convertible before Aug. 1, 2015 if the price of shares for 20 out of 30 trading days is 130% of the conversion price. After Aug. 1, 2015, the notes are convertible at any time. The notes can be settled for cash or a combination of cash and shares.

Proceeds will be used to repay debt under MF's $1.2 billion revolving credit facility, for general corporate purposes and to fund the cost of convertible note hedge transactions, which the company is entering into in order to cover the number of MF Global common shares that will initially underlie the notes.

The cost of the hedge transactions will be offset partially by a corresponding set of warrant transactions, which have a strike price of $14.2275. The transactions will raise the initial conversion premium from the issuer's perspective to 75%.

New York-based MF Global is a broker-dealer of commodities and listed derivatives.

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