By Susanna Moon
Chicago, Dec. 11 – AmTrust Financial Services, Inc. will retire $131,881,000 of its 5.5% convertible senior notes due 2021 under separate, privately negotiated exchange agreements, according to an 8-K filing with the Securities and Exchange Commission.
In exchange, holders will receive 2,731,727 common shares and $158,257,000 principal amount of the company’s new 2.75% convertible senior notes due 2044.
After the exchange, $68,119,000 principal amount of the 5.5% convertibles will remain outstanding.
The company also entered into separate, privately negotiated purchase agreements to issue an additional $76 million principal amount of the 2044 notes at 90% of par. Proceeds will be used for general corporate purposes.
The 2044 notes will be callable at par plus accrued interest after Dec. 15, 2018. Before that, the notes will be callable if the company’s trading price is at or above $97.50, or 130% of the conversion price, for the required measurement period.
The notes will be putable at par plus accrued interest on Dec. 15, 2024 or if there is a fundamental change.
Beginning with the six-month period starting Dec. 15, 2021, holders will receive additional contingent interest if the trading price of the notes is at or above 130% of the principal amount of the 2044 notes.
The amount of contingent interest payable per $1,000 principal amount of 2044 notes for any contingent interest period will be 0.25% of the average trading price of the notes during the specified measurement period.
The notes will have an issue price of $900 for each $1,000 principal amount. An amount equal to the difference between the issue price and the principal amount at maturity will accrue under a schedule to be set forth in the notes indenture. The issue price plus the accrued amount per $1,000 principal amount at maturity is referred to as the “accreted principal amount.”
Before Sept. 15, 2044, the notes will be convertible only under certain conditions and, after that, at any time before the close of business on the second scheduled trading day immediately preceding maturity.
The conversion rate will initially be 13.3333 common shares per $1,000 principal amount, which is an initial conversion price of $75.00 per common share, for a conversion premium of about 30%.
The company’s stock closed at $57.77 per share on Dec. 10.
Upon a fundamental change, holders may put the notes at par plus accrued interest to but excluding the fundamental change purchase date.
Holders who convert their notes under a make-whole fundamental change by Dec. 15, 2018 may receive a make-whole premium in the form of an increase in the conversion rate.
AmTrust is a New York-based insurance company.
| Issuer: | AmTrust Financial Services Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $158,257,000
|
| Maturity: | Dec. 15, 2044
|
| Coupon: | 2.75%; additional 0.25% contingent interest per $1,000 of notes beginning with the six-month period starting Dec. 15, 2021 if notes are trading at or above 130% of par
|
| Price: | Par
|
| Conversion ratio: 13.3333 common shares per $1,000 principal amount
|
| Conversion price: | $75.00
|
| Conversion premium: | 30%
|
| Call option: | At par plus accrued interest after Dec. 15, 2018; before that, if company’s trading price is at or above $97.50, or 130% of the conversion price, for required measurement period
|
| Put option: | At par plus accrued interest on Dec. 15, 2024 or if there is a fundamental change
|
| Pricing date: | Dec. 11
|
| Stock ticker: | Nasdaq: AFSI
|
| Stock price: | $57.77 at close on Dec. 10
|
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