By Rebecca Melvin
New York, Dec. 6 - HCI Group Inc. priced $100 million of five-year convertibles at par after the market close Thursday to yield 3.875% with an initial conversion premium of 30%, according to a syndicate source.
The Rule 144A deal priced at the cheap end of talk, which was for a 3.375% to 3.875% yield and a 30% to 35% initial conversion premium.
There is a $15 million greenshoe for the offering, which was priced via JMP Securities LLC as the bookrunning manager.
The bonds mature March 15, 2019 and are non-callable for life with no puts.
The securities are contingently convertible at 98% if shares exceed 130% of the conversion price, and they have net share settlement.
There is takeover protection and dividend protection for any dividends paid above $0.275 per quarter.
Up to $30 million of the proceeds will be used to repurchase shares of common stock under the terms of a prepaid forward transaction. Remaining proceeds are for general corporate purposes, including, but not limited to, working capital.
Concurrently with the pricing of the notes, HCI entered into the prepaid forward transaction with Deutsche Bank AG, London Branch. The repurchased shares are to be delivered over a settlement period in 2019. The prepaid forward is subject to early settlement, in whole or in part, at any time prior to the final settlement date at the option of the forward counterparty.
Tampa, Fla.-based HCI is a property and casualty insurer.
| Issuer: | HCI Group Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $100 million
|
| Greenshoe: | $15 million
|
| Maturity: | March 15, 2019
|
| Bookrunner: | JMP Securities LLC
|
| Co-managers: | Sterne Agee & Leach Inc. and Gilford Securities Inc.
|
| Coupon: | 3.875%
|
| Price: | Par
|
| Yield: | 3.875%
|
| Conversion premium: | 30%
|
| Conversion price: | $62.47
|
| Conversion ratio: | 16.0090 shares
|
| Contingent conversion: | Yes at 98%, at 130% price hurdle
|
| Calls: | Non-callable
|
| Puts: | No puts
|
| Takeover protection: | Yes
|
| Dividend protection: | Yes
|
| Price talk: | 3.375%-3.875%, up 30%-35%
|
| Pricing date: | Dec. 5
|
| Settlement date: | Dec. 11
|
| Stock symbol: | NYSE: HCI
|
| Stock reference price: | $48.05
|
| Distribution: | Rule 144A
|
| Market capitalization: | $552.3 million
|
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