March 13, 2013
Meadowbrook Insurance Group, Inc.
(NYSE: MIG) ("Meadowbrook" or the "Company"), announced that it has priced and agreed to sell to initial purchasers in a private offering
aggregate principal amount of its Cash Convertible Senior Notes due 2020 (the "notes"). Meadowbrook has also granted the initial purchasers of the notes an option to purchase up to an additional
aggregate principal amount of the notes. The notes are being offered only to qualified institutional buyers (as defined in the Securities Act of 1933, as amended (the "Securities Act")) pursuant to Rule 144A under the Securities Act.
The notes are unsecured and bear interest at a rate of 5.00% per year, payable semiannually on
of each year, commencing on
September 15, 2013
. The notes will be convertible at the option of the holders into solely cash in certain circumstances and during certain periods. The notes will not be convertible into Meadowbrook common stock or any other securities under any circumstances. The notes will mature on
March 15, 2020
, unless earlier repurchased or converted into cash in accordance with their terms prior to such date. The conversion rate for the notes initially will be 108.8732 shares of common stock per
principal amount of notes, which is equivalent to an initial conversion price of approximately
per share of Meadowbrook common stock. The initial conversion price of the notes represents a premium of approximately 37.50% to the
per share last reported sale price of the Company's common stock on
, 2013. The offering of the notes is expected to close on
March 18, 2013
, subject to customary closing conditions.
In connection with the pricing of the notes, the Company entered into privately negotiated cash convertible note hedge transactions with one or more of the initial purchasers of the notes or their respective affiliates or other financial institutions (the "option counterparties"). The cash convertible note hedge transactions are expected to reduce the Company's exposure to potential cash payments due upon conversion of the notes in excess of the principal amount thereof. The Company also entered 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 option to purchase additional notes, the Company may increase the size of the cash convertible note hedge transactions and enter into additional warrant transactions.