Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) announced today that it intends to privately offer, subject to market and other conditions, $325 million aggregate principal amount of cash convertible senior notes due 2020. The Company also expects to grant the initial purchasers of the notes an option to purchase up to an additional $50 million aggregate principal amount of the notes, solely to cover over-allotments, if any. The notes will be offered and sold only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).
The notes will pay interest semi-annually on January 15 and July 15 and will mature on January 15, 2020. The notes will be convertible only in certain circumstances and solely into cash. Upon conversion, in lieu of receiving shares of our common stock, a holder will receive an amount in cash, per $1,000 principal amount of Notes, at a conversion rate to be determined. The interest rate, conversion rate, offering price and other terms of the notes will be determined by negotiations among the Company and the initial purchasers of the notes.
In connection with the pricing of the notes, the Company intends to enter into privately negotiated cash convertible note hedge transactions with one or more of the initial purchasers of the notes or their respective affiliates (the “option counterparties”). The cash convertible note hedge transactions are expected to offset cash payments due upon conversion of the notes. The Company also intends to enter into privately negotiated warrant transactions with the option counterparties, which could have a dilutive effect to the extent that the price of the Company’s common stock exceeds the applicable strike price of the warrants. If the initial purchasers exercise their over-allotment option, the Company may increase the size of the cash convertible note hedge transactions and enter into additional warrant transactions.
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