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PHH Corporation (NYSE:PHH) ("PHH" or the "Company") announced that yesterday it priced its offering of $220 million in aggregate principal amount of 6.00% Convertible Senior Notes due 2017 (the "notes"). PHH has also granted the underwriters of the notes a 30-day over-allotment option to purchase up to $30 million additional aggregate principal amount of the notes (subject to certain limitations). The notes will be convertible, under certain circumstances, into cash and, if applicable, shares of PHH's common stock based on an initial conversion rate for the notes of 78.2014 shares of PHH's common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $12.79 per share of common stock and represents an approximately 25% conversion premium over the last reported sale price of PHH's common stock on January 10, 2012, which was $10.23 per share. The conversion rate and the conversion price will be subject to adjustment in certain events, such as distributions of dividends or stock splits. PHH expects to close the notes offering on or about January 17, 2012, subject to the satisfaction of various customary closing conditions.
J.P. Morgan Securities LLC and BofA Merrill Lynch are acting as joint book-running managers for the offering. Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBC Capital Markets, LLC and RBS Securities Inc. are acting as co-managers.
PHH intends to use a portion of the net proceeds of the offering, along with the net proceeds from the recent reopening of its 9 ¼% senior notes due 2016, to repay at or prior to maturity the outstanding $250 million aggregate principal amount of its 4.00% Convertible Senior Notes due April 15, 2012. The remainder of the net proceeds will be used for general corporate purposes.
Interest on the notes will be payable semiannually in arrears on June 15 and December 15 of each year, beginning June 15, 2012. The notes will mature on June 15, 2017, unless previously repurchased or converted in accordance with their terms. The notes will be PHH's senior unsecured obligations and will rank equally with all of PHH's existing and future senior unsecured debt and senior to all of its existing and future subordinated debt. The notes are not redeemable by PHH prior to the maturity date.