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Cowen Group, Inc. (NASDAQ:COWN) (“Cowen” or the “Company”) today announced that it intends to offer, subject to market and other conditions, $125 million aggregate principal amount of cash convertible senior notes due 2019 to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Company also expects to grant a 30-day option to the initial purchasers to purchase up to $18.75 million aggregate principal amount of additional notes on the same terms and conditions.
Nomura Securities International, Inc. and Cowen and Company, LLC are acting as book-running managers for the offering.
The interest rate, conversion rate and other terms of the notes will be determined at the time of pricing of the offering. When issued, the notes will be unsecured senior obligations of Cowen. The Company expects to pay interest on the notes semi-annually on March 15 and September 15 of each year, commencing September 15, 2014. The notes will mature on March 15, 2019, unless earlier repurchased or converted into cash in accordance with their terms prior to such date. Prior to September 15, 2018, the notes will be convertible solely into cash under certain conditions and during certain periods based on the value of the Company’s Class A common stock. The notes will not be convertible into Cowen’s Class A common stock or any other security under any circumstances. The Company will not have the right to redeem the notes prior to maturity.
In connection with the pricing of the notes, the Company expects to enter into a cash convertible note hedge transaction with an affiliate of Nomura Securities International, Inc. (the “Option Counterparty”). The Company also expects to enter into a warrant transaction with the Option Counterparty. The cash convertible note hedge transaction is expected to reduce the Company’s exposure to potential cash payments in excess of the principal amount of converted notes that the Company may be required to make upon conversion of the notes. The warrant transaction will separately have a dilutive effect to the extent that the market value per share of the Company’s Class A common stock exceeds the applicable strike price of the warrants.