Radian to Offer $350 Million Convertible Senior Notes
08 Novembre 2010 - 12:41PM
Business Wire
Radian Group Inc. (NYSE: RDN) announced today that it has
commenced an underwritten public offering of up to $350 million
principal amount of its Convertible Senior Notes due 2017. Morgan
Stanley & Co. Incorporated (“Morgan Stanley”) will act as the
sole book-running manager. The underwriters will also have the
option to purchase up to an additional 15%, or $52.5 million
principal amount, of notes from the Company at the offering price,
less underwriting discounts and commissions, within 30 days, solely
to cover over-allotments, if any. The offering is subject to market
conditions, and there can be no assurance as to whether or when the
offering may be completed, or as to the actual size or terms of the
offering.
Prior to August 15, 2017, the notes will be convertible only
upon specified events and during specified periods and, thereafter,
at any time. Upon conversion, the Company will pay cash up to the
principal amount of converted notes and intends to settle the
remainder of its conversion obligation, if any, in shares, but may
settle the remainder in cash or a combination of cash and shares,
at the Company’s option. The interest rate and terms of the notes,
including the conversion price of the notes, will be determined by
negotiations between the Company and the underwriters.
In connection with the offering, the Company intends to enter
into a capped call transaction with an affiliate of one of the
underwriters in the offering (the “counterparty”). The capped call
transaction is intended to reduce the potential dilution to the
Company’s common stock and/or offset potential cash payments in
excess of the principal amount of converted notes upon conversion
of the notes. However, if the market value of the Company’s common
stock exceeds a cap specified in the capped call transaction, the
settlement amount the Company receives under such transaction will
be capped, and the anti-dilutive and/or offsetting effect of the
capped call transaction will be limited.
The Company intends to use the net proceeds from the offering to
fund working capital requirements and for general corporate
purposes, which may include repayment or repurchase of its
outstanding debt, including the Company’s 7.75% senior notes and
the Company’s 5.625% senior notes either before or at their
respective scheduled maturity dates on June 1, 2011 and February
15, 2013, and additional capital support for its mortgage insurance
business. In addition, the Company intends to use a portion of the
net proceeds of the offering to fund the cost to it of the capped
call transaction with the counterparty.
In connection with establishing its initial hedge of the capped
call transaction, the Company expects that the counterparty or its
affiliate will enter into various over-the-counter derivative
transactions with respect to the Company’s common stock
concurrently with, or shortly after, the pricing of the notes and
may unwind all or a portion of the over-the-counter derivatives and
purchase the Company’s common stock in open market transactions
shortly following the pricing of the notes. In addition, the
counterparty or its affiliate may modify or unwind its hedge
positions by entering into or unwinding various derivative
transactions and/or purchasing or selling the Company’s common
stock or the notes in secondary market transactions prior to
maturity of the notes (and is likely to do so during any settlement
period relating to a conversion of the notes). The effect,
including the direction and magnitude of the effect, if any, of
these transactions and activities on the market price of the
Company’s common stock will depend on market conditions and cannot
be ascertained at this time, but could have an adverse impact on
the price of the Company’s common stock and/or the value of the
notes.
If the underwriters exercise their over-allotment option to
purchase additional notes, the Company may enter into an additional
capped call transaction with the counterparty. The notes are being
offered pursuant to an effective shelf registration statement that
was previously filed with the Securities and Exchange Commission
(the “SEC”) and was declared effective on July 29, 2009. A copy of
the preliminary prospectus supplement and related base prospectus
for the offering has been filed with the SEC and is available on
the SEC’s website, www.sec.gov. Alternatively, Morgan Stanley will
arrange to send you the preliminary prospectus supplement and
related base prospectus if you request them by contacting Morgan
Stanley & Co. Incorporated, 180 Varick Street, 2nd Floor, New
York, New York 10014, Attention: Prospectus Department,
1-866-718-1649. This press release is for informational purposes
only and is not an offer to buy or the solicitation of an offer to
sell any security of the Company, nor will there be any sale of
such security in any jurisdiction in which such offer, sale or
solicitation would be unlawful. The offering may be made only by
means of a prospectus supplement and related base prospectus.
About Radian
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia,
provides private mortgage insurance and related risk mitigation
products and services to mortgage lenders nationwide through its
principal operating subsidiary, Radian Guaranty Inc. These services
help promote and preserve homeownership opportunities for
homebuyers, while protecting lenders from default-related losses on
residential first mortgages and facilitating the sale of
low-downpayment mortgages in the secondary market. Additional
information may be found at www.radian.biz.
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