By Rebecca Melvin
New York, Sept. 15 - Tower Group Inc. priced $135 million of four-year convertible senior notes after the market close Tuesday to yield 5% with an initial conversion premium of 27.5%, according to a news release.
The Rule 144A deal priced at the midpoint of talk, which was for a coupon of 4.75% to 5.25% and a premium of 25% to 30%.
Bank of America Merrill Lynch, J.P. Morgan Securities Inc. and FBR Capital Markets were the joint bookrunners.
There is a $15 million greenshoe.
The bonds are non-callable for life. There is takeover and dividend protection, and there is contingent conversion at 130%.
About $50 million of the proceeds will be used to repurchase common stock concurrently with the offering. Tower also plans to use about $10.4 million to pay for convertible note hedge transactions, with remaining proceeds earmarked for repaying about $56 million of outstanding borrowings under its revolving credit facility and for general corporate purposes.
In connection with the offering, the company entered into convertible note hedge and warrant transactions. The hedge transactions are aimed at reducing potential dilution of stock and will offset potential cash payments in excess of the principal amount of converted notes.
The warrant transactions have an initial strike price of $33.42 per share, which raises the effective initial conversion premium to 55% from Tower's perspective.
New York-based Tower Group is a provider of commercial, personal and specialty property and casualty insurance products and services.
| Issuer: | Tower Group Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $135 million
|
| Greenshoe: | $15 million
|
| Maturity: | Sept. 15, 2014
|
| Bookrunners: | Bank of America Merrill Lynch, J.P. Morgan Securities Inc., FBR Capital Markets
|
| Coupon: | 5%
|
| Price: | Par
|
| Yield: | 5%
|
| Conversion price: | $27.49
|
| Conversion rate: | 36.3782 common shares per $1,000 in notes
|
| Price talk: | 4.75%-5.25%, up 25%-30%
|
| Calls: | No calls
|
| Contingent conversion: | Yes, at 130%
|
| Distribution: | Rule 144A
|
| Pricing date: | Sept. 14
|
| Settlement date: | Sept. 20
|
| Stock symbol: | Nasdaq: TWGP
|
| Stock reference price: | $21.56
|
| Market capitalization: | $935.02 million
|
© 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.
