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Encore Capital Group, Inc. Announces Private Placement Of Convertible Senior Notes

Stocks in this article: ECPG

SAN DIEGO, March 5, 2014 /PRNewswire/ -- Encore Capital Group, Inc. (NASDAQ: ECPG) (the "Company") today announced that it intends to offer, subject to market and other conditions, $125,000,000 aggregate principal amount of convertible senior notes due 2021 (the "notes") in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act").  The notes will be the Company's senior unsecured obligations, and will be fully and unconditionally guaranteed on a senior unsecured basis by Midland Credit Management, Inc., a wholly owned subsidiary of the Company.  In connection with the offering, the Company expects to grant the initial purchasers an option to purchase up to an additional $18,750,000 aggregate principal amount of such notes to cover sales in excess thereof.  The notes will be convertible, subject to satisfaction of certain conditions and during certain periods, into cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election.

Encore Capital Group, Inc.

The Company intends to use the net proceeds from this offering:

  • to pay the cost of certain capped call transactions (described below); and
  • for general corporate purposes, including working capital.

If the initial purchasers exercise their option to purchase additional notes, the Company may enter into additional capped call transactions.  The Company intends to use the resulting additional net proceeds of the sale of the additional notes:

  • to pay the cost of entering into additional capped call transactions; and
  • for general corporate purposes, including working capital.

In connection with the pricing of the notes, the Company expects to enter into capped call transactions with one or more of the initial purchasers (or their affiliates) and/or one or more other financial institutions (the "option counterparties").  The 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 notes in the event that the market price of the Company's common stock is greater than the strike price of the capped call transactions, which will initially correspond to the initial conversion price of the notes, with such reduction and/or offset subject to a cap based on the cap price of the capped call transactions.  If the initial purchasers exercise their option to purchase additional notes, the Company expects to enter into additional capped call transactions with the option counterparties.

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