Old Republic greenshoe exercise ups 3.75% convertibles to $550 million

By Susanna Moon

Chicago, March 9 - Old Republic International Corp.'s underwriters exercised the $50 million over-allotment option for its 3.75% convertible senior notes due March 15, 2018, bringing the total deal size to $550 million.

As previously reported, Old Republic priced an upsized $500 million of the convertibles after the market close on March 2 at par with an initial conversion premium of 32.5%.

The deal was increased from a planned amount of $250 million. The greenshoe was raised to $50 million from $37.5 million.

Old Republic decided not to proceed with a concurrent offering of $250 million of straight senior notes in a separate public offering.

The registered convertibles will be non-callable for life, with cash dividend protection of $0.175 per quarter.

Each note is convertible into 64.3407 common shares at any time prior to maturity, which is equivalent to a conversion price of $15.54 per share.

Old Republic stock closed at $12.05 (NYSE: ORI) on March 1.

Some of the proceeds will be used to repay debt that was assumed in connection with the acquisition of PMA Capital Corp. Remaining proceeds will be used for general corporate purposes, including making additional capital contributions to insurance company subsidiaries that may be necessary.

Morgan Stanley & Co. Inc. and UBS Securities LLC were the joint bookrunners, with co-managers Dowling and Partners Securities LLC, Keefe, Bruyette & Woods Inc., Macquarie Capital (USA) Inc., Raymond James & Associates Inc. and Wunderlich Securities Inc.

Chicago-based Old Republic is an insurance holding company.

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