Cowen greenshoe lifts 3% five-year convertibles deal to $149.5 million

By Susanna Moon

Chicago, March 10 - Cowen Group Inc. said its underwriters fully exercised the $19.5 million over-allotment option on its 3% five-year convertible senior notes, bringing the total deal size to $149.5 million.

Cowen priced a slightly upsized $130 million of the convertibles after the market close on March 4 with an initial conversion premium of about 30%.

As previously reported, the Rule 144A deal was initially talked at $125 million in size, and pricing came at the cheap end of 2.5% to 3% coupon talk and at the midpoint of 27.5% to 32.5% premium talk.

The greenshoe was upsized to $19.5 million of additional notes from $18.75 million.

The joint bookrunners were Nomura Securities International Inc. and Cowen and Co. LLC.

The non-callable notes will mature on March 15, 2019. They are contingently convertible into cash only after Sept. 15, 2018.

In connection with the pricing of the notes, the company entered into convertible note hedge and warrant transactions with an affiliate of Nomura, which has the effect of boosting the initial conversion premium from the issuer's perspective to 75%.

About $17.8 million of the proceeds will be used to pay the cost of the convertible note hedge transaction. The company also expects to use $340,000 of proceeds to repurchase shares of common stock from initial purchasers of the notes. Remaining proceeds are for general corporate purposes.

New York-based Cowen is a financial services company.

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