Florida-based insurtech HCI Group has announced a new debt offering of $150 million convertible senior notes due 2042, the proceeds of which will be used for a share repurchase, as well as for general corporate purposes.
The 4.75% convertible senior notes will be offered in a private placement to qualified institutional buyers pursuant under Rule 144A, with the sale to close by May 23rd.
HCI will also grant initial purchasers of the notes an option to buy up to an additional $22.5 million amount of the debt.
The company plans to use $60 million of the net proceeds from the offering of the notes to repurchase shares of its common stock.
This will be done concurrently with the pricing of the offering with or through one of the initial purchasers or its affiliate at a purchase price per share equal to the $64.43 per share closing price of HCI’s common stock on May 18th.
HCI added that the remainder of the net proceeds would be used for general corporate purposes, which would mean a minimum of $90 million, or up to $112.5 million if buyers choose to purchase the additional debt that the firm is making available.
The conversion rate for the notes will initially be 12.4166 shares per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $80.54 per share of common stock.