By Rebecca Melvin
New York, Nov. 9 - Radian Group Inc. priced an upsized $400 million of seven-year convertible senior notes on Monday at par to yield 3% with an initial conversion premium of 32.5%, according to a news release. The greenshoe was exercised later in the day, raising the total amount to $450 million.
The registered, off-the-shelf offering, which was originally going to be $350 million in size, priced at the tight end of revised talk, which was tightened to a coupon of 3% to 3.25%, from 3.25% to 3.75%, and richened to a premium to 30% to 32.5%, from 25% to 30%.
There is a $50 million greenshoe, which was lowered from $52.5 million initially talked.
Morgan Stanley & Co. Inc. was the bookrunner, with Dowling & Partners Securities LLC, Keefe, Bruyette & Woods Inc., Macquarie Capital (USA) Inc. and Northland Capital Markets acting as co-managers.
The bonds will be non-callable for life with no puts. There is contingent conversion subject to a 130% price trigger, and the bonds have standard dividend and takeover protection.
In connection with the offering, the company entered into a capped call transaction that boosts the effective conversion premium to about 60% from the issuer's perspective.
Proceeds will be used to fund working capital and for general corporate purposes, including repaying Radian's 7.75% senior notes due 2011 and 5.625% senior notes due 2013.
A portion of the proceeds will be used to fund the capped call transaction.
Radian Group is a Philadelphia-based mortgage insurance business.
| Issuer: | Radian Group Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $400 million, upsized from $350 million ($450 million with exercised greenshoe)
|
| Greenshoe: | $50 million, reduced from $52.5 million, exercised
|
| Maturity: | Nov. 15, 2017
|
| Bookrunner: | Morgan Stanley & Co. Inc.
|
| Co-managers: | Dowling & Partners Securities LLC, Keefe, Bruyette & Woods Inc., Macquarie Capital (USA) Inc., Northland Capital Markets
|
| Coupon: | 3%
|
| Price: | Par
|
| Yield: | 3%
|
| Conversion premium: | 32.5%
|
| Conversion price: | $11.69
|
| Conversion ratio: | 85.5688
|
| Call: | Non-callable for life
|
| Puts: | No puts
|
| Contingent conversion: | Yes, at 130% trigger
|
| Takeover protection: | Yes, via make-whole table
|
| Dividend protection: | Yes, standard
|
| Price talk: | 3%-3.25%, up 30%-32.5%, revised from 33%-3.75%, up 25%-30%
|
| Pricing date: | Nov. 8
|
| Settlement date: | Nov. 15
|
| Distribution: | Registered, off the shelf
|
| Stock symbol: | NYSE: RDN
|
| Stock reference price: | $8.82
|
| Market capitalization: | $726.1 million
|
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