Encore Capital Group, Inc. Prices $100 Million Convertible Senior Notes Offering
The notes will be senior, unsecured obligations of Encore, and will be fully and unconditionally guaranteed on a senior unsecured basis by
The notes will be redeemable, in whole or in part, for cash at Encore’s option at any time, and from time to time, on or after
If a “fundamental change” (as defined in the indenture for the notes) occurs, then, subject to a limited exception, holders of the notes may require Encore to repurchase all or part of their notes for cash. The repurchase price will be equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the applicable repurchase date.
Encore estimates that the net proceeds from the offering will be approximately
Encore expects that holders of the 2020 Convertible Notes who sell or exchange their 2020 Convertible Notes in negotiated repurchase transactions with Encore will unwind various derivative transactions with respect to Encore’s common stock and/or purchase shares of Encore’s common stock in the market to unwind their existing hedge positions in connection with the 2020 Convertible Notes. The above repurchase transactions could have the effect of raising or maintaining the market price of Encore’s common stock above the level that would otherwise have prevailed, or preventing or slowing a decline in the market price of Encore’s common stock.
Encore expects certain purchasers of the notes, including holders of the 2020 Convertible Notes that purchase notes at the time of the above repurchase transactions, to sell shares of Encore’s common stock in the market and/or enter into various derivatives transactions with respect to shares of Encore’s common stock. This activity could have the effect of decreasing (or reducing the size of any increase in) the market price of Encore’s common stock below the level that would otherwise have prevailed.
In connection with issuing the 2020 Convertible Notes, Encore entered into certain capped call option transactions with certain financial institutions (the “existing option counterparties”). In connection with the repurchases of the 2020 Convertible Notes described above, Encore has entered into agreements with the existing option counterparties to terminate a portion of such existing capped call option transactions in a notional amount corresponding to the amount of the 2020 Convertible Notes repurchased. In connection with any termination of such existing capped call option transactions and the related unwinding of the existing option counterparties’ existing hedge positions with respect to such transactions, the existing option counterparties and/or their respective affiliates may sell shares of Encore’s common stock in secondary market transactions, and/or unwind various derivative transactions with respect to Encore’s common stock. This activity could decrease (or reduce the size of any increase in) the market price of Encore’s common stock at that time and could decrease (or reduce the size of any increase in) the market value of the notes. In connection with these transactions, Encore may make or receive payments and/or deliveries of shares of Encore’s common stock in amounts that depend on the market price of Encore’s common stock during the unwind period.
Encore believes that the market activities described above occurred during the course of the day on which Encore priced the offering of the notes, represented a significant portion of the trading in Encore’s common stock on that day and could have reduced the market price of Encore’s common stock and, in turn, the initial conversion price of the notes.
Encore intends to use the remainder of the net proceeds from the offering of notes for general corporate purposes, which may include working capital, capital expenditures or additional acquisitions, or repayment or repurchase of outstanding debt, including Encore’s revolving credit facility and Encore’s other outstanding existing convertible senior notes and exchangeable senior notes.
The offer and sale of the notes and any shares of common stock issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act or any state securities laws, and the notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and state securities laws. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes or any shares of common stock issuable upon conversion of the notes, nor will there be any sale of the notes or any such shares, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful. Any offer of the securities will be made only by means of a private offering memorandum.
Encore is an international specialty finance company that provides debt recovery solutions and other related services across a broad range of financial assets. Through its subsidiaries around the globe, Encore purchases or services portfolios of receivables from major banks, credit unions and utility providers.
This press release includes forward-looking statements, including statements regarding the completion of the offering and the expected amount and intended use of the net proceeds. Forward-looking statements represent Encore’s current expectations regarding future events and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements. Among those risks and uncertainties are market conditions, the satisfaction of the closing conditions related to the offering and risks relating to Encore’s business, including those described in periodic reports that Encore files from time to time with the
Source: Encore Capital Group Inc