By Abigail W. Adams
Portland, Me., March 1 – Encore Capital Group Inc. priced an upsized $200 million of six-year convertible notes after the market close on Tuesday at par at the midpoint of talk with a coupon of 4% and an initial conversion premium of 27.5%, according to a company news release and a market source.
Price talk was for a coupon of 3.75% to 4.25% and an initial conversion premium of 25% to 30%.
Morgan Stanley & Co. LLC, Truist Securities Inc. and Credit Suisse Securities (USA) LLC were bookrunners for the Rule 144A deal, which carries an upsized greenshoe of $30 million.
The initial size of the offering was $175 million with a greenshoe of $26.25 million.
The notes are non-callable until March 20, 2026 and then subject to a 130% hurdle.
They are putable upon a fundamental change.
The company repurchased $154.8 million in principal of Encore Capital Europe Finance Ltd.’s 4.5% exchangeable senior notes due 2023 for $192.5 million in privately negotiated transactions and terminated a portion of the capped call transactions entered into when the 2023 notes were issued.
In connection with the offering, the company entered into new capped call transactions with a cap price of $82.69, which represents a premium of 60% over the last reported sales price of stock.
Net proceeds are expected to be $194.1 million or will be $223.3 million if the greenshoe is exercised in full.
Approximately $16.1 million or net proceeds will be used to cover the cost of the call spread.
Remaining proceeds will be used to fund a portion of the repurchase of the 4.5% exchangeable notes and for general corporate purposes, which may include the repurchase or repayment of outstanding debt, including its global senior credit facility, remaining 4.5% exchangeable notes and 3.25% convertible notes due 2025, and to repurchase stock.
Encore Capital is a San Diego-based specialty finance company.
| Issuer: | Encore Capital Group Inc.
|
| Amount: | $200 million
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| Greenshoe: | $30 million
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| Issue: | Convertible senior notes
|
| Maturity: | March 15, 2029
|
| Bookrunners: | Morgan Stanley & Co. LLC, Truist Securities Inc. and Credit Suisse Securities (USA) LLC
|
| Coupon: | 4%
|
| Price: | Par
|
| Yield: | 4%
|
| Conversion premium: | 27.5%
|
| Conversion price: | $65.89
|
| Conversion rate: | 15.1763
|
| Call options: | Non-callable until March 20, 2026 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
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| Pricing date: | Feb. 28
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| Settlement date: | March 3
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| Distribution: | Rule 144A
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| Talk: | Coupon of 3.75% to 4.25% and initial conversion premium of 25% to 30%
|
| Stock symbol: | Nasdaq: ECPG
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| Stock price: | $51.68 at market close Feb. 28
|
| Market capitalization: | $1.21 billion
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