March 6, 2014
/PRNewswire/ -- Encore Capital Group, Inc. (NASDAQ: ECPG) (the "Company") yesterday priced
aggregate principal amount of 2.875% convertible senior notes due 2021 (the "notes") to be sold 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. The size of the offering was increased from the previously announced aggregate principal amount of
. In connection with the offering, the Company has granted the initial purchasers an option to purchase up to an additional
aggregate principal amount of such notes to cover sales in excess thereof.
The notes will be senior unsecured obligations of the Company. The notes will bear interest at a rate of 2.875% per year payable semiannually in arrears on
of each year, beginning on
, 2014. The notes will be convertible at the option of the noteholders prior to the close of business on the business day immediately preceding
September 15, 2020
only upon satisfaction of certain conditions and during certain periods, and on or after
September 15, 2020
, at any time until the close of business on the second scheduled trading day immediately prior to maturity regardless of these conditions. The Company may satisfy its conversion obligation by paying or delivering, as the case may be, 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. The conversion rate for the notes will initially be 16.8386 shares per
principal amount, which is equivalent to an initial conversion price of approximately
per share of common stock. The initial conversion price of the notes represents a premium of approximately 25% to the
per share closing price of the Company's common stock on
, 2014. The sale of the notes is expected to close on
March 11, 2014
, subject to customary closing conditions.
In connection with the pricing of the notes, the Company entered 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 initially corresponds to the initial conversion price of the notes and is subject to certain adjustments under the terms of the capped call transactions), with such reduction and/or offset subject to a cap based on the cap price of the capped call transactions. The cap price of the capped call transactions will initially be
per share, which represents a premium of approximately 75% over the last reported sale price of the Company's common stock on
March 5, 2014
, and is subject to certain adjustments under the terms 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.
The Company has been advised by the option counterparties that in connection with establishing their initial hedge of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to the Company's common stock and/or purchase shares of the Company's common stock in privately negotiated transactions and/or open market transactions 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.