Encore Capital Group, Inc. (NASDAQ:ECPG) (“Encore Capital” and
together with its subsidiaries, “Encore”) announced today the
pricing of an underwritten public offering of $150,000,000
aggregate principal amount of exchangeable senior notes due 2023
(the “notes”) issued by its wholly owned subsidiary, Encore Capital
Europe Finance Limited (“Encore Finance”), at a price to the public
of 100% of the principal amount of the notes, before the
underwriting discount. Encore Finance also granted the
underwriters a 30-day option to purchase up to an additional
$22,500,000 aggregate principal amount of such notes, solely to
cover over-allotments, on the same terms and conditions. The
notes will be senior, unsecured obligations of Encore Finance and
will be fully and unconditionally guaranteed, on a senior,
unsecured basis, by Encore Capital. The notes will mature on
September 1, 2023, unless earlier repurchased, redeemed or
exchanged in accordance with their terms. The notes will bear
interest at a rate of 4.50% per year, payable semiannually in
arrears on March 1 and September 1 of each year, beginning on March
1, 2019. The notes will be exchangeable at the option of the
noteholders at any time prior to the close of business on the
business day immediately preceding March 1, 2023 only upon
satisfaction of certain conditions and during certain periods, and
on or after March 1, 2023, at any time until the close of business
on the second scheduled trading day immediately prior to maturity
regardless of these conditions. Encore Finance may satisfy
its exchange obligation by paying or delivering, as the case may
be, cash, shares of Encore Capital’s common stock or a combination
of cash and shares of Encore Capital’s common stock, at Encore
Finance’s election, subject to certain restrictions. The
exchange rate for the notes is initially 22.4090 shares of Encore
Capital’s common stock per $1,000 principal amount of notes
(equivalent to an initial exchange price of approximately $44.62
per share of Encore Capital’s common stock), subject to adjustment.
The initial exchange price of the notes
represents a premium of approximately 25.0% to the $35.70 per share
closing price of Encore Capital’s common stock on July 17, 2018.
The offering is expected to close on July 20, 2018, subject to
customary closing conditions.
In connection with the pricing of the notes,
Encore Capital entered into privately negotiated capped call
transactions with an affiliate of one of the underwriters of the
offering and certain other financial institutions (the “option
counterparties”). The capped call transactions are expected
generally to reduce potential dilution to Encore Capital’s common
stock upon any exchange of notes and/or offset any potential cash
payments Encore Finance is required to make in excess of the
principal amount of exchanged notes, as the case may be, with such
reduction and/or offset subject to a cap. The cap price of the
capped call transactions will initially be $62.475 per share, which
represents a premium of 75% over the last reported sale price of
Encore Capital’s common stock of $35.70 per share on July 17, 2018,
and is subject to certain adjustments under the terms of the capped
call transactions. If the underwriters of the offering exercise
their option to purchase additional notes, Encore Capital expects
to enter into additional capped call transactions with the option
counterparties.
Encore Capital expects that, in connection with
establishing their initial hedges of the capped call transactions,
the option counterparties or their respective affiliates will enter
into various derivative transactions with respect to Encore
Capital’s common stock concurrently with, and/or purchase Encore
Capital’s common stock shortly after, the pricing of the relevant
notes. This activity could increase (or reduce the size of any
decrease in) the market price of Encore Capital’s common stock or
the notes concurrently with, or shortly after, the pricing of the
notes. In addition, the option counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to Encore Capital’s
common stock and/or purchasing or selling Encore Capital’s common
stock or other securities of Encore’s in secondary market
transactions following the pricing of the notes and prior to the
maturity of the notes (and are likely to do so during any
observation period related to an exchange of notes). This activity
could also cause or avoid an increase or a decrease in the market
price of Encore Capital’s common stock or the notes, which could
affect holders’ ability to exchange their notes and, to the extent
the activity occurs during any observation period related to an
exchange of notes, it could affect the number of shares and value
of the consideration that the holder will receive upon exchange of
the notes.
Encore estimates that the net proceeds from this
offering will be approximately $144.7 million, after deducting the
underwriting discount and the estimated offering expenses payable
by it (assuming no exercise of the underwriters’ option to purchase
additional notes). Encore expects to use the net proceeds
from this offering to partially fund the acquisition of all the
outstanding equity interests of Janus Holdings Luxembourg S.à r.L.
(“Janus”), not currently held directly or indirectly by Encore,
and, immediately following the consummation of such acquisition,
the purchase by Janus of all the outstanding equity interests of
Cabot Holdings S.à r.L., not currently held directly or indirectly
by Encore, as announced by Encore on May 8, 2018.
SunTrust Robinson Humphrey and Credit Suisse are
acting as joint book-running managers for the offering.
The notes are being offered pursuant to an
effective shelf registration statement that Encore Capital and
Encore Finance have filed with the Securities and Exchange
Commission (“SEC”). Before you invest, you should read the
prospectus in that registration statement and other documents
Encore has filed with the SEC for more complete information about
Encore and this offering. The offering is being made only by
means of a prospectus supplement and the accompanying
prospectus. Copies of the prospectus supplement and
accompanying prospectus for the offering may be obtained from
SunTrust Robinson Humphrey, Inc., 3333 Peachtree Road NE, 9th
Floor, Atlanta, GA 30326, Attention: Prospectus Department, or by
telephone at 1-404-926-5744, by fax at 1-404-926-5464 or by email
at strh.prospectus@suntrust.com; or from Credit Suisse Securities
(USA) LLC, Attention: Prospectus Department, One Madison Avenue,
New York, New York, 10010, or by telephone at 1-800-221-1037, or by
email at newyork.prospectus@credit-suisse.com. You may also
obtain these documents free of charge when they are available by
visiting EDGAR on the SEC’s website at www.sec.gov.
This press release does not constitute an offer
to sell or the solicitation of an offer to buy securities, nor will
there be any sales of these securities, in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws or any state or jurisdiction.
About Encore
Encore is an international specialty finance company that
provides debt recovery solutions and other related services for
consumers across a broad range of financial assets. Through
its subsidiaries around the globe, Encore purchases portfolios of
consumer receivables from major banks, credit unions, and utility
providers.
Encore partners with individuals as they repay their debt
obligations, helping them on the road to financial recovery and
ultimately improving their economic well-being. Encore is the
first and only company of its kind to operate with a Consumer
Bill of Rights that provides industry-leading commitments to
consumers.
Headquartered in San Diego, Encore is a publicly traded
NASDAQ Global Select company (ticker symbol: “ECPG”) and a
component stock of the Russell 2000, the S&P Small Cap 600 and
the Wilshire 4500.
Forward Looking Statements
The statements in this press release that are
not historical facts, including, most importantly, those statements
preceded by, or that include, the words “will,” “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 our future operating results,
performance, business plans, prospects, closing of the offering or
use of the net proceeds from the offering. For all
“forward-looking statements,” Encore 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 Encore 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 Encore with the Securities and
Exchange Commission, including the most recent reports on Forms
10-K, 10-Q and 8-K, as they may be amended from time to time.
Encore disclaims any intent or obligation to update these
forward-looking statements.
Contacts
Encore Investor RelationsBruce Thomas(858)
309-6442bruce.thomas@encorecapital.com
SOURCE: Encore Capital Group, Inc.
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