Radian to issue make-whole call for 9% notes, may redeem or buy back convertibles

By Susanna Moon

Chicago, July 6 – Radian Group Inc. said it will call the remaining $196 million principal amount of its 9% senior notes due 2017 at a make-whole premium using excess liquidity as part of its capital strategy.

Radian’s plans also include “opportunistically removing” its outstanding convertible senior notes from its capital structure and possibly the redemption, repurchase or exchange of some other senior debt.

The company plans to redeem the 9% notes due 2017 at a price that includes a make-whole premium of about $14 million, assuming a redemption date of June 30, plus accrued interest.

Funding for the company’s proposals will come from the extra liquidity caused by the redemption of surplus notes, according to a company announcement.

The company said it plans to tap some of this liquidity “to accelerate its capital plan, with the objective of better positioning Radian Group for a return to investment-grade ratings in the future.”

Radian Guaranty Inc., the company’s mortgage insurance subsidiary, redeemed its $325 million surplus notes due to Radian Group on June 30, which added $325 million of liquidity, the company said.

After the redemption, Radian said it has more than $700 million of available liquidity.

“Our redemption of the entire $325 million surplus note at the earliest possible date further enhances our liquidity position and reflects Radian’s strong financial performance and positive future outlook,” Radian’s chief executive officer, S.A. Ibrahim, said in the press release.

On Dec. 30, 2015, Radian Group transferred $325 million of cash and marketable securities to Radian Guaranty in exchange for a surplus note, which was scheduled to mature on Dec. 31, 2025. Radian Guaranty obtained regulatory approval to redeem the entire note on June 30, the earliest possible redemption date.

The company’s board of directors also has authorized a $125 million share buyback program.

Radian is a Philadelphia-based provider of private mortgage insurance, risk management products and real estate services to financial institutions.

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