DFC Global Corp. (NASDAQ: DLLR), a leading international diversified financial services company serving primarily unbanked and under-banked consumers for over 30 years, today announced that it has consummated the sale of $230 million aggregate principal amount of 3.25% senior convertible notes due 2017, which includes the exercise in full of the initial purchasers’ overallotment option.
The notes are unsecured, senior obligations of the Company and will pay interest semi-annually at a rate of 3.25%. Prior to October 15, 2016, the notes are convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the second scheduled trading day immediately preceding the maturity date. Upon conversion, holders will receive cash up to the principal amount and shares of the Company’s common stock in respect of any excess conversion amount. The initial conversion rate for the notes is 46.8962 shares of common stock per $1,000 principal amount of the notes, which is equal to a conversion price of approximately $21.32 per share, representing a 29.0% conversion premium based on the closing price of the Company’s common stock of $16.53 per share on April 10, 2012. The notes mature on April 15, 2017.
In connection with the offering of the notes, the Company entered into convertible note hedge transactions in respect of its common stock with affiliates of the initial purchasers of the notes (the “option counterparties”). These convertible note hedge transactions are intended to reduce the potential dilution upon future conversion of the notes. In addition, the Company entered into separate warrant transactions with the option counterparties at a higher strike price. The warrant transactions could separately have a dilutive effect to the extent that the market value per share of the Company’s common stock exceeds the applicable strike price of the warrants.
The net proceeds from this offering was approximately $222.0 million, after deducting the initial purchasers’ discounts and the estimated offering expenses. The Company applied a portion of the net proceeds from the offering and the sale of the warrants to fund the costs and expenses of the convertible note hedge transactions, and the Company expects to apply the remaining net proceeds to repay certain indebtedness and for other general corporate purposes, which may include acquisitions, investments and repurchases of Company common stock from time to time pursuant to the Company’s previously announced share repurchase program.