By Rebecca Melvin
New York, March 6 - Encore Capital Group Inc. priced an upsized $140 million of seven-year convertible senior notes at par late Wednesday to yield 2.875% with an initial conversion premium of 25%, according to a news release.
The Rule 144A offering was upsized from an initially talked $125 million in size. Pricing came toward the rich end of 2.75% to 3.25% coupon talk and at the midpoint of 22.5% to 27.5% premium talk.
There is a greenshoe of up to $21 million of additional notes, upsized from $18.75 million.
Joint bookrunners were Morgan Stanley & Co. LLC, Barclays, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and RBS Securities Inc.
The notes are non-callable, with no puts. There is takeover and dividend protection, and the notes are contingently convertible before Sept. 15, 2020 only under certain conditions.
In connection with the sale of the notes, the company entered into capped call transactions with initial purchasers of the notes or their affiliates. The capped call is intended to reduce potential dilution and/or offset cash payments the company is required to make in excess of the principal upon conversion if shares are higher than the strike price of the capped call transactions. With a strike at $83.1425 initially, it raises the premium to about 75% from the issuer's perspective.
Proceeds will be used to pay the cost of capped call transactions and for general corporate purposes, including working capital.
Encore is a San Diego-based consumer accounts receivable management firm.
| Issuer: | Encore Capital Group Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $140 million, upsized from $125 million
|
| Greenshoe: | $21 million, upsized from $18.75 million
|
| Maturity: | March 15, 2021
|
| Joint bookrunners: | Morgan Stanley & Co. LLC, Barclays, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBS Securities Inc.
|
| Coupon: | 2.875%
|
| Price: | Par
|
| Yield: | 2.875%
|
| Conversion premium: | 25%
|
| Conversion price: | $59.39
|
| Conversion ratio: | 16.8386
|
| Calls: | Non-callable
|
| Puts: | No puts
|
| Takeover protection: | Yes
|
| Dividend protection: | Yes
|
| Contingent conversion: | Before Sept. 15, 2020 under certain conditions
|
| Capped call: | Yes, $83.1425 strike boosts premium to 75% from issuer's perspective
|
| Price talk: | 2.75%-3.25%, up 22.5%-27.5%
|
| Pricing date: | March 5
|
| Settlement date: | March 11
|
| Distribution: | Rule 144A
|
| Stock symbol: | Nasdaq: ECPG
|
| Stock price: | $47.51 at close March 5
|
| Market capitalization: | $1.22 billion
|
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