By Rebecca Melvin
New York, Dec. 11 – AmTrust Financial Services Inc. priced $76 million of new 30-year convertible notes at 90 with a coupon of 2.75% and an initial conversion premium of 30%, according to a news release.
The convertibles were sold via privately negotiated purchase agreements. Lazard Freres & Co. was the placement agent.
AmTrust also plans to issue an additional $158.3 million of the 2044 notes and 2.7 million shares of common stock in exchange for $131.9 million of AmTrust’s existing 5.5% convertible senior notes due 2021, which will be retired.
After the transactions, $68.1 million of the 5.5% convertibles will remain outstanding. AmTrust priced $200 million of the existing notes in December 2011 via Goldman Sachs & Co. and J.P. Morgan Securities LLC.
Holders of the new 2.75% notes will receive contingent interest if the trading price of the 2044 notes is greater than or equal to a certain threshold.
The new notes will be non-callable until Dec. 15, 2018 and then provisionally callable if the underlying stock exceeds 130% of the conversion price.
Holders can put the new bonds on Dec. 15, 2024 or in the event of a fundamental change.
The notes will mature on Dec. 15, 2044.
The initial conversion rate is 13.3333 shares per bond, and the initial conversion price is $75.00.
The securities have net share settlement.
AmTrust is a New York-based property and casualty insurer.
| Issuer: | AmTrust Financial Services Inc.
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| Issue: | Convertible notes
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| Amount: | $76 million
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| Maturity: | Dec. 15, 2044
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| Coupon: | 2.75%
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| Price: | 90
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| Conversion premium: | 30%
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| Conversion price: | $75.00 per share
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| Conversion ratio: 13.3333 shares
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| Calls: | Non-callable until Dec. 15, 2018, then provisionally callable at 130% price hurdle
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| Put: | Dec. 15, 2024
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| Contingent conversion: | Yes
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| Contingent interest: | Starting Dec. 15, 2021
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| Takeover protection: | Yes
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| Net share settlement: | Yes
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| Announcement date: | Dec. 11
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| Stock symbol: | Nasdaq: AFSI
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| Stock price: | $57.77 at close Dec. 10
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| Market capitalization: | $4.36 billion
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| Placement agent: | Lazard Freres & Co.
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| Distribution: | Private placement
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