Encore Capital plans $125 million five-year convertible notes to yield 3.25%-3.75%, up 30%-35%

By Stephanie N. Rotondo

Seattle, Feb. 27 – Encore Capital Group Inc. is offering $125 million of convertible senior notes due 2022 with a coupon of 3.25% to 3.75% and an initial conversion premium of 30% to 35%, according to a market source and an 8-K filing with the Securities and Exchange Commission.

Pricing is expected after Monday’s close.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC are the joint bookrunning managers.

The deal will include an $18.75 million over-allotment option.

Conversions will be settled in cash, stock, or a combination, at the company’s option.

The bonds are non-callable for five years, at which point they can be redeemed if the stock hits a 130% price hurdle.

There is dividend and change-of-control protection.

Proceeds will be used for general corporate purposes, which may include working capital, capital expenditures, acquisitions or the repayment or repurchase of debt.

Encore is a San Diego-based specialty finance company.

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