Rodman & Renshaw financing for proposed Cowen acquisition could include convertible or PIPE deal

By Jennifer Lanning Drey

Portland, Ore., Dec. 15 - Planned financing for Rodman & Renshaw Capital Group, Inc.'s proposed acquisition of Cowen Group Inc. includes a net share settlement convertible note to supplement the cash the company would contribute, Michael Lacovara, chief executive officer of Rodman & Renshaw, said Monday during an investor presentation held to discuss the proposed transaction.

"We chose this instrument because it allows for a substantially accretive transaction but has limited effect on forward EPS and leaves the resulting company with a liquid, healthy balance sheet," Lacovara said.

The $50 million principal would be settled in cash, and the conversion spread would be settled in common stock under the treasury stock method.

The convertible would have a coupon of less than 7% and a conversion premium of more than 10%, according to Lacovara's presentation.

Other planned features include limited warrant coverage and a term of two years or less.

"Those terms reflect the extensive discussions we have had with the providers of the financing. If Cowen's board will sign a confidentiality agreement with Rodman, as we have requested, I would be pleased to meet with them and provide every detail regarding our financing, and I could do so today," Lacovara said Monday.

As previously reported, on Dec. 8 Cowen rejected Rodman's unsolicited acquisition proposal to acquire Cowen for $7 per share.

Possible PIPE

Lacovara also said Monday that since going public with its announcement of the acquisition proposal on Dec. 8, Rodman has received substantial expressions of interest from financing sources wanting to make strategic common equity investments into Rodman, which could provide all or a part of the required financing.

"As prudent stewards of our franchise, we will pursue those new financing options and opportunities as well as the convertible described and modeled in our investor presentation," Lacovara said.

Rodman intends to continue its outreach to stockholders through the holidays and beyond, he said.

Rodman & Renshaw is a holding company based in New York. Its subsidiaries include investment bank Rodman & Renshaw, LLC, Rodman Principal Investments, LLC and Miller Mathis & Co., LLC.

Cowen is a New York-based provider of investment banking, sales and trading and equity research services.

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