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Encore Capital Group, Inc. Announces Private Placement Of $22.5 Million Additional Convertible Senior Notes

Stocks in this article: ECPG

SAN DIEGO, July 23, 2013 /PRNewswire/ -- On June 24, 2013, Encore Capital Group, Inc. (NASDAQ: ECPG) (the "Company") sold $150.0 million in aggregate principal amount of the Company's 3.00% Convertible Senior Notes due 2020 (the "Firm Notes") in a private placement transaction. The Firm Notes were issued pursuant to an Indenture, dated June 24, 2013, among the Company, Midland Credit Management, Inc., a wholly owned subsidiary of the Company, as guarantor, and Union Bank, N.A., as trustee. On July 18, 2013, the initial purchasers exercised, in full, their option to purchase an additional $22.5 million in aggregate principal amount of 3.00% Convertible Senior Notes due 2020 (the "Additional Notes" and together with the Firm Notes, the "Notes").  The Company today announced the closing of the sale of the Additional Notes.

In connection with the initial purchasers' exercise of their option to purchase the Additional Notes, the Company entered into additional privately negotiated capped call transactions (the "Additional Capped Call Transactions") with one or more of the initial purchasers (or their affiliates) and one or more other financial institutions (the "Option Counterparties").  The Additional Capped Call Transactions cover, collectively, the number of shares of the Company's common stock underlying the Additional Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Notes.  The cost of the Additional Capped Call Transactions was approximately $2.4 million.

The Additional Capped Call Transactions are expected generally to reduce the potential dilution and/or offset the cash payments the Company is required to make in excess of the principal amount upon conversion of the Additional Notes in the event that the market price of the Company's common stock is greater than the strike price of the Additional Capped Call Transactions (which initially corresponds to the initial conversion price of the Additional Notes and is subject to certain adjustments under the terms of the Additional Capped Call Transactions), with such reduction and/or offset subject to a cap based on the cap price of the Additional Capped Call Transactions. The cap price of the Additional Capped Call Transactions will initially be $61.5475 per share, which represents a premium of approximately 75% over the last reported sale price of the Company's common stock on June 18, 2013, and is subject to certain adjustments under the terms of the Additional Capped Call Transactions.

The Additional Capped Call Transactions are separate transactions, in each case, entered into by the Company with the Option Counterparties, and are not part of the terms of the Notes and will not affect any holder's rights under the Notes. Holders of the Notes will not have any rights with respect to the Additional Capped Call Transactions.

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