By Devika Patel
Knoxville, Tenn., Jan. 2 - Virtus Holdings, Inc. sold $45 million of its convertible preferred stock to Harris Bankcorp, Inc. in a private placement on Dec. 31, according to an 8-K filed Friday with the Securities and Exchange Commission by parent company, The Phoenix Cos., Inc.
Harris may buy an additional $25 million in preferreds if Virtus issues new equity.
Each preferred pays 8% in dividends.
The preferreds are convertible into 23% of Virtus' equity.
Harris may require Virtus to repurchase 5% of the preferreds at a price equal to the preferreds' liquidation preference of approximately $9 million at any time after three years.
Virtus also may redeem the preferreds for an equivalent amount.
There is forced conversion subject to a 175% threshold and a hard call after six years. The preferreds are putable after seven years.
These put and call rights will terminate if Virtus stock trades above the conversion price for five consecutive trading days.
Proceeds will be used to repay existing intercompany obligations to Phoenix and to bolster Virtus' working capital.
Phoenix also announced that formerly private company Virtus completed a spinoff after market close on Dec. 31.
The distribution of Virtus stock to Phoenix shareholders occurred through a pro rata dividend of Virtus common stock at a ratio of one Virtus share for every 20 Phoenix shares held. Fractional shares were not distributed, and any Phoenix shareholder entitled to receive a fractional share will, instead, receive a cash payment in January.
Phoenix is a Hartford, Conn., manufacturer of life insurance, annuity and investment products.
Virtus provides investment management products and services to individuals and institutions.
| Issuer: | Virtus Holdings, Inc.
|
| Issue: | Convertible preferred stock
|
| Amount: | $45 million
|
| Dividends: | 8%
|
| Price: | Par of $1,000
|
| Call: | Forced conversion subject to 175% threshold, hard call at liquidation preference after six years; for 5% in years three through six
|
| Put: | Any time after seven years; for 5% in years three through seven
|
| Warrants: | No
|
| Investor: | Harris Bankcorp, Inc.
|
| Announcement date: | Jan. 2
|
| Settlement date: | Dec. 31
|
| Stock symbol: | Nasdaq: VRTS
|
| Stock price: | $10.50 at close Jan. 2
|
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