Encore Capital Group, Inc. Announces Private Placement of $15 Million
Additional Convertible Senior Notes
SAN DIEGO, Dec. 11, 2012
SAN DIEGO, Dec. 11, 2012 /PRNewswire/ --On November 27, 2012, Encore Capital
Group, Inc. (NASDAQ: ECPG) (the "Company") sold $100,000,000 in aggregate
principal amount of the Company's 3.00% Convertible Senior Notes due 2017 (the
"Notes") in a private placement transaction. The Notes were issued pursuant to
an Indenture, dated November 27, 2012, between the Company and Union Bank,
N.A., as trustee. On December 6, 2012, the initial purchasers exercised, in
full, their option to purchase an additional $15,000,000 in aggregate
principal amount of the Notes (the "Additional Notes"). The Company today
announced the closing of the sale of the Additional Notes.
In connection with the initial purchasers' exercise of their option to
purchase the Additional Notes, the Company entered into convertible note hedge
transactions with certain financial institutions (the "option
counterparties"). The convertible note hedge transactions are expected
generally to reduce the potential dilution and/or offset the cash payments the
Company is required to make in excess of the principal amount upon conversion
of the Additional Notes in the event that the market price of the Company's
common stock is greater than the strike price of the convertible note hedge
transactions. The Company also entered into warrant transactions with the
option counterparties. The warrant transactions could separately have a
dilutive effect if the market price of the Company's common stock exceeds the
strike price of the warrant transactions, unless the Company elects, subject
to certain conditions, to settle the warrant transactions in cash. The strike
price of the warrant transactions will initially be $44.1875 per share, which
represents a premium of approximately 75% over the last reported sale price of
the Company's common stock on November 20, 2012, and is subject to certain
adjustments under the terms of the warrant transactions.
The Company has been advised by the option counterparties that in connection
with establishing their initial hedge of the convertible note hedge
transactions and warrant transactions, the option counterparties or their
respective affiliates expect to enter into various derivative transactions
with respect to the Company's common stock and/or purchase shares of the
Company's common stock in privately negotiated transactions and/or open market
transactions. This activity could increase (or reduce the size of any decrease
in) the market price of the Company's common stock or the Notes at that time.
In addition, the Company has been advised by the option counterparties that
the option counterparties or their respective affiliates may modify their
hedge positions by entering into or unwinding various derivative transactions
with respect to the Company's common stock and/or purchasing or selling the
Company's common stock in secondary market transactions following the initial
purchasers' exercise of their option to purchase the Additional Notes and
prior to the maturity of the Notes (and are likely to do so during any
observation period related to a conversion of the Notes). This activity could
also cause or avoid an increase or a decrease in the market price of the
Company's common stock or the Notes, which could affect the ability of holders
to convert the Notes and, to the extent the activity occurs during any
observation period related to a conversion of the Notes, it could affect the
amount and value of the consideration that holders will receive upon
conversion of the Notes.
The net proceeds from the sale of the Additional Notes were approximately
$14.6 million, after deducting estimated fees and expenses and the initial
purchasers' discounts and commissions. The Company used approximately $1.5
million of the net proceeds to pay the cost of the additional convertible note
hedge transactions, taking into account the proceeds to the Company of the
additional warrant transactions; and the balance of the net proceeds for
general corporate purposes.
The Additional Notes, the shares of the Company's common stock issuable upon
conversion of the Additional Notes, if any, the convertible note hedge
transactions and the warrant transactions have not been and will not be
registered under the Securities Act of 1933, as amended (the "Securities Act")
or the securities laws of any other jurisdiction and may not be offered or
sold in the United States absent registration or an applicable exemption from
This press release is being issued pursuant to Rule 135c under the Securities
Act and does not constitute an offer to sell or the solicitation of an offer
to buy securities. Any offer of the securities will be made only by means of a
private offering memorandum.
The statements in this press release that are not historical facts, including,
most importantly, those statements preceded by, or that include, the words
"may," "believe," "projects," "expects," "anticipates" or the negation
thereof, or similar expressions, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995
(the "Reform Act"). These statements may include, but are not limited to,
statements regarding the anticipated use of proceeds from the offering. For
all "forward-looking statements," the Company claims the protection of the
safe harbor for forward-looking statements contained in the Reform Act. Such
forward-looking statements involve risks, uncertainties and other factors
which may cause actual results, performance or achievements of the Company and
its subsidiaries to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These risks, uncertainties and other factors are discussed in the
reports filed by the Company with the Securities and Exchange Commission,
including the most recent reports on Forms 10-K, 10-Q and 8-K, each as it may
be amended from time to time. The Company disclaims any intent or obligation
to update these forward-looking statements.
Encore Capital Group, Inc.
Paul Grinberg (858) 309-6904
Adam Sragovicz (858) 309-9509
Information found on the Company's website is not incorporated by reference.
SOURCE Encore Capital Group, Inc.
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