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Molina Healthcare, Inc. Announces Pricing Of $450 Million Of 1.125% Cash Convertible Senior Notes

Stocks in this article: MOH

In connection with establishing their initial hedge of the cash convertible note hedge and warrant transactions, the option counterparties have advised the Company that they or their affiliates expect to enter into various derivative transactions with respect to the Company’s common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of the Company’s common stock or the notes at that time. In addition, the option counterparties have advised the Company that they or their affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the Company’s common stock and/or purchasing or selling the Company’s common stock or other securities of the Company in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so during any observation period related to a conversion of notes). This activity could also cause or avoid an increase or a decrease in the market price of the Company’s common stock or the notes.

The Company estimates that the net proceeds from the offering will be approximately $436.1 million (or approximately $533.1 million if the initial purchasers exercise their option to purchase additional notes in full), after deducting the initial purchasers’ discounts and commissions and the estimated offering expenses payable by the Company. The Company intends to use the net proceeds to (1) pay the costs of the cash convertible note hedge transactions described above (after such costs are partially offset by the proceeds to the Company from the warrant transactions described above), (2) repurchase $50 million of its common stock at today’s closing price of $30.77 per share in negotiated transactions with institutional investors in the offering through one of the initial purchasers or its affiliate, as the Company’s agent, concurrently with the pricing of the offering, and (3) repay all of the currently outstanding indebtedness under the Company’s credit facility in the amount of approximately $40 million. The remainder of the net proceeds will be used for working capital and general corporate purposes, including possible repurchases of the Company’s 3.75% Convertible Senior Notes due 2014. The Company’s repurchases of common stock may have the effect of increasing or preventing a decline in the price of the Company’s common stock, and the notes, concurrently with the pricing of the notes and for a period of time following such pricing.

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