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HCI greenshoe exercised, lifts 3.875% convertibles to $103 million
By Marisa Wong
Madison, Wis., Jan. 3 - The underwriter of HCI Group, Inc.'s recent offering of 3.875% convertible senior notes due 2019 exercised $3 million of the deal's $15 million over-allotment option. HCI said it completed the sale of a total of $103 million convertibles on Friday.
HCI priced $100 million of five-year convertibles at par on Dec. 5 to yield 3.875% with an initial conversion premium of 30%.
As previously reported, 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.
JMP Securities LLC was the bookrunning manager.
The bonds mature March 15, 2019 and are non-callable for life with no puts.
Prior to Jan. 1, 2019, the securities are contingently convertible at 98% if shares exceed 130% of the conversion price. After that, the notes are convertible at any time.
The notes have net share settlement.
There is takeover protection and dividend protection for any dividends paid above $0.275 per quarter.
The conversion rate for the notes is initially 16.0090 shares per $1,000 principal amount of notes, which is equivalent to an initial conversion price of $62.47 per share.
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.
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