Radian completes transactions in Q2 to strengthen capital structure

By Lisa Kerner

Charlotte, N.C., July 22 – Radian Group Inc. completed a series of transactions in the second quarter to strengthen its capital structure, including to reduce overall cost of capital and to improve its maturity profile, according to its second-quarter earnings news release.

The company paid $127 million in cash and delivered 28.4 million shares for a total consideration of $657 million to purchase a total of $389 million of its 2017 convertible notes.

In connection with the note purchase, Radian terminated a corresponding portion of the capped call it had entered into in 2010 in connection with the initial issuance of the 2017 notes. Radian received proceeds of $12 million in cash and 2.3 million shares of Radian common stock.

Radian funded the note purchase by issuing 5.25% senior notes due 2020, for net proceeds of $343 million. The company used a portion of the proceeds to enter into an accelerated share repurchase program.

The ASR was executed for a cash payment of $202 million in exchange for 9.2 million initial shares and about an additional 1.6 million shares upon completion of the ASR, assuming an average stock price of $18.68, the release stated.

These actions resulted in a loss on induced conversion and debt extinguishment of $91.9 million. Radian also expects to reduce its $16 million annual interest expense and to increase its fully diluted share count of roughly 2.8 million shares.

Radian, a Philadelphia-based mortgage insurance company, maintains about $735 million of currently available liquidity.

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