By Susanna Moon
Chicago, Sept. 12 – Molina Healthcare, Inc. agreed to sell $125 million of its 1.625% convertible senior bonds due 2044, according to an 8-K filing with the Securities and Exchange Commission.
The company entered into separate, privately negotiated note purchase agreements with some institutional investors.
Under the agreement, the company will issue $125 million principal amount of the convertibles for cash in the amount of about $125.69 million, which is 100.5% of par plus accrued interest from Sept. 5 to Sept. 16.
Recent issue
The company issued on Sept. 8, as previously announced, $176,551,000 principal amount of the 1.625% convertibles due 2044 and 1,683,925 shares of common stock in exchange for $176,551,000 principal amount of its 3.75% convertible senior notes due Oct. 1, 2014.
The initial conversion price is $58.09, which is a roughly 30% premium to the average of the daily volume-weighted average prices of the company’s common stock over the 10 trading days beginning Aug. 19. It is a 26.2% premium to the company’s $46.02 closing share price on Sept. 4.
The notes are freely convertible six months prior to the maturity. Before that, they are convertible only under certain limited circumstances. Among those circumstances, the notes will be convertible during a quarter if the company’s closing share price remained at or above 130% of the conversion price for at least 20 trading days during the last 30 consecutive trading days of the immediately preceding quarter.
The notes become callable at par on Aug. 19, 2018.
Holders have a put option at par on Aug. 19, 2018, Aug. 19, 2024, Aug. 19, 2029, Aug. 19, 2034 and Aug. 19, 2039. There is also a change-of-control put option at par.
Contingent interest
Beginning Aug. 15, 2018, the notes will pay contingent interest if the average trading price of the notes during the 10 trading days beginning on the 12th trading day preceding the first day of that semiannual interest period is greater than or equal to the upside trigger, in which case the contingent interest amount will be 0.6% per year of the average trading price, or is less than or equal to the downside trigger, in which case the contingent interest amount will be 0.25% per annum of the average trading price.
The downside trigger is $500 per $1,000 principal amount of notes for the six months following Aug. 15, 2018. After that, it will be the lesser of (a) $900 and (b) the downside trigger applicable to the preceding semiannual interest period plus $12.50.
The upside trigger is $1,300 per $1,000 principal amount of notes.
The company will pay contingent interest equal to any extraordinary cash dividend or distribution paid to all or substantially all holders of its common stock that the board of directors designates as payable with respect to the 1.625% convertibles.
In addition, the company will pay 25 basis points of additional interest on each interest payment date for which the principal amount of notes outstanding was less than $100 million and 25 bps – or, under certain circumstances 50 bps – of additional interest, at its election, as the sole remedy for failing to comply with some of its reporting obligations under the indenture.
Long Beach, Calif.-based Molina Healthcare is a health management organization that works with Medicaid patients and other government assistance programs.
| Issuer: | Molina Healthcare, Inc.
|
| Issue: | Convertible senior notes bonds
|
| Amount: | $125 million
|
| Maturity: | Aug. 15, 2044
|
| Coupon: | 1.625%
|
| Price: | 100.5
|
| Conversion premium: | 30%
|
| Conversion price: | $58.09
|
| Conversion ratio: | 17.2157
|
| Pricing date: | Sept. 5
|
| Settlement date: | Sept. 16
|
| Stock symbol: | NYSE: MOH
|
| Stock price: | $46.54 at close Sept. 8
|
|
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
