WellPoint, Inc. (NYSE: WLP) today announced the pricing of its offering of $1.35 billion principal amount of senior convertible debentures due 2042. The debentures were offered and sold only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The sale is expected to close October 9, 2012. WellPoint has also granted to the initial purchasers of the debentures the right to purchase up to an additional $150 million principal amount of debentures to cover overallotments, if any.
Interest will be payable on the debentures semi-annually at a rate of 2.750% per annum. In addition to regular interest, beginning on October 15, 2022, contingent interest will accrue in certain circumstances relating to the trading price of the debentures. In certain circumstances, the debentures will be convertible into cash up to their principal amount and any conversion value above the principal amount will, at WellPoint’s option, be settled with shares of WellPoint common stock or cash. The initial conversion rate for the debentures is 13.2319 shares of common stock per $1,000 principal amount of the debentures, which is equal to an initial conversion price of approximately $75.575 per share, representing a 25% conversion premium based on the closing price of WellPoint's common stock of $60.46 per share on October 2, 2012. The debentures mature on October 15, 2042.
WellPoint may not redeem the debentures prior to October 20, 2022, except in connection with certain tax-related events. On or after October 20, 2022, WellPoint may redeem for cash all or a part of the debentures if the last reported sale price of its common stock has been at least 150% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period prior to the date on which WellPoint provides notice of redemption. The redemption price will equal 100% of the principal amount of the debentures to be redeemed, plus accrued and unpaid interest, including any contingent interest and additional interest, if any, to but excluding the redemption date. WellPoint may also redeem all or a part of the debentures for cash on or prior to October 15, 2013 at a premium if certain U.S. federal tax legislation, regulations or rules are enacted or are issued.