Tower Group, Inc. announced that it intends to offer $135 million aggregate principal amount of convertible senior notes due 2014 through a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, subject to market and other conditions.
“The notes will pay interest semiannually and are expected to be convertible prior to March 15, 2014 only upon specified events and thereafter at any time,” said the bulletin. “Upon conversion, the notes may be settled, at Tower’s election, in shares of Tower’s common stock, cash or a combination of cash and shares of Tower’s common stock. Tower may not redeem the notes at its election prior to their maturity date. Tower expects to grant an over-allotment option to the initial purchasers for an additional $15 million aggregate principal amount of notes. The final terms of the notes, including the interest rate and conversion rate, will be determined by negotiations between Tower and the initial purchasers of the notes.”
Tower also explained that it “expects to use approximately $50 million of the net proceeds of the offering to repurchase shares of its common stock, of which Tower anticipates using up to $40 million to repurchase shares through one or more of the initial purchasers or their respective affiliates concurrently with the offering.
“Tower also expects to use a portion of the net proceeds from the offering of the notes to pay the costs of the convertible note hedge transactions described below (after such costs are partially offset by the proceeds that Tower receives from the warrant transactions described below). Tower expects to use the remainder of the net proceeds to repay approximately $56 million of outstanding borrowings under its revolving credit facility and for general corporate purposes.
Source: Tower Group.
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