Ocwen Financial $125 million convertible talked at 3.0%-3.5% yield, up 30%-35%

Nashville, July 20 - Ocwen Financial Inc. launched $125 million of 20-year contingent convertible notes talked to yield 3.0% to 3.5% with a 30% to 35% initial conversion premium.

Jefferies & Co. is sole bookrunner of the Rule 144A deal, which is set to price after the close Thursday.

The senior unsecured notes will be non-callable for five years with puts in years five, 10 and 15.

There is a 125% contingent conversion trigger, but offering materials stated that the issue may include language giving the company the option to waive the CoCo feature pending a final ruling by the Financial Accounting Standards Board on the treatment of potential dilution from CoCo converts in reporting earnings.

A task force of the FASB has tentatively recommended a change in accounting rules for CoCo convertibles that would require issuers of those securities to report diluted EPS even if the CoCo trigger has not been hit, plus present historical EPS figures on an as if diluted basis.

The task force is scheduled to meet again Sept. 29 and 30 to discuss the matter.

The Ocwen convertible also will have full dividend protection by way of a conversion ratio adjustment and a premium make-whole provision in the event of a cash takeover.

A $20 million greenshoe is available.

The West Palm Beach, Fla.-based savings and loan, which services of non-conforming, sub-performing and non-performing mortgage loans, intends to use up to 25% of proceeds to buy back stock concurrently with the offering.

Remaining proceeds will be used to reduce debt, for working capital and for general corporate purposes.

Ocwen Financial shares closed Tuesday down 19 cents, or 1.93%, to $9.68.

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