By Rebecca Melvin
New York, April 27 - PMI Group Inc. priced an upsized $261 million of 10-year convertible senior notes after the close of markets Monday to yield 4.5% with an initial conversion premium of 27.5%, according to a news release.
Initially the deal was talked at $200 million in size.
The paper priced at the rich end of revised talk for the coupon, which was 4.5% to 5%, and at the point of revised talk for the premium. Original talk on the deal was for a yield of 5% to 5.5% and an initial conversion premium of 20% to 25%.
The deal has a $39 million over-allotment option, which was upsized from $30 million.
PMI priced a concurrent offering of about $478 million of common stock, or 77.8 million shares at $6.15 per share.
Credit Suisse Securities (USA) LLC and Bank of America Merrill Lynch were the joint bookrunners of both registered offerings, with Dowling & Partners Securities as the co-manager.
The convertibles are non-callable until April 15, 2015 and then provisionally callable at a 130% price trigger. There are no puts.
The notes have contingent conversion at a price trigger of 130%. Conversion settlement can be made in cash, stock or a combination.
The convertibles also have full dividend protection and change-of-control protection via a make-whole adjustment premium delivered upon conversion as incremental shares.
PMI intends to use $75 million of the proceeds to pay a portion of its outstanding debt under its credit facility and to use $45 million for working capital and general corporate purposes.
Remaining proceeds are earmarked for principal subsidiary PMI Mortgage Insurance Co., with an amount equal to the gross proceeds from the convertible notes offering to be contributed in the form of a surplus note to be issued by PMI Mortgage Insurance to PMI and the remaining amount to be contributed in the form of a contribution to capital.
PMI expects PMI Mortgage Insurance will use proceeds for working capital and general corporate purposes.
PMI is a Walnut Creek, Calif.-based provider of residential mortgage insurance and credit enhancement products.
| Issuer: | PMI Group Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $261 million, upsized from $200 million
|
| Greenshoe: | $39 million, upsized $30 million
|
| Maturity: | April 15, 2020
|
| Concurrent offering: | $478 million of common stock, or 77.8 million shares at $6.15 per share
|
| Bookrunners: | Credit Suisse Securities (USA) LLC and Bank of America Merrill Lynch
|
| Co-manager: | Dowling & Partners Securities
|
| Coupon: | 4.5%
|
| Price: | Par, $1,000
|
| Yield: | 4.5%
|
| Conversion premium: | 27.5%
|
| Conversion price: | $7.84
|
| Conversion ratio: | 127.5307 shares
|
| Call protection: | Non-callable until April 15, 2015, then provisionally callable at a 130% price hurdle
|
| Puts: | No puts
|
| Contingent conversion: | Yes, at 130%
|
| Price talk: | 4.5%-5%, up 27.5%, revised from 5%-5.5%, up 20%-25%
|
| Pricing date: | April 26
|
| Settlement date: | April 30
|
| Distribution: | Registered
|
| Stock reference price: | $6.15
|
| Stock listing: | NYSE: PMI
|
| Market capitalization: | $534.6 million
|
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