Attached files
file | filename |
---|---|
8-K - FORM 8-K - Tower Group International, Ltd. | y86568e8vk.htm |
Exhibit 99.1
Tower Group, Inc. Announces Proposed $135 Million Private Offering of Convertible Senior Notes
NEW YORK, September 14, 2010 (BUSINESS WIRE) Tower Group, Inc. (NASDAQ: TWGP) (Tower) today
announced that it intends to offer $135 million aggregate principal amount of convertible senior
notes due 2014 (the notes) through a private offering to qualified institutional buyers pursuant
to Rule 144A under the Securities Act of 1933, as amended, subject to market and other conditions.
The notes will pay interest semiannually and are expected to be convertible prior to March 15, 2014
only upon specified events and thereafter at any time. Upon conversion, the notes may be settled,
at Towers election, in shares of Towers common stock, cash or a combination of cash and shares of
Towers common stock. Tower may not redeem the notes at its election prior to their maturity date.
Tower expects to grant an over-allotment option to the initial purchasers for an additional $15
million aggregate principal amount of notes. The final terms of the notes, including the interest
rate and conversion rate, will be determined by negotiations between Tower and the initial
purchasers of the notes.
Tower expects to use approximately $50 million of the net proceeds of the offering to repurchase
shares of its common stock, of which Tower anticipates using up to $40 million to repurchase shares
through one or more of the initial purchasers or their respective affiliates concurrently with the
offering. Tower also expects to use a portion of the net proceeds from the offering of the notes
to pay the costs of the convertible note hedge transactions described below (after such costs are
partially offset by the proceeds that Tower receives from the warrant transactions described
below). Tower expects to use the remainder of the net proceeds to repay approximately $56 million
of outstanding borrowings under its revolving credit facility and for general corporate purposes.
In connection with the offering of the notes, Tower expects to enter into convertible note hedge
transactions with one or more of the initial purchasers or their respective affiliates (the hedge
counterparties). The convertible note hedge transactions are intended to reduce potential
dilution to Towers common stock and to offset potential cash payments in excess of the principal
amount of converted notes, as the case may be, upon any conversion of the notes. In addition,
Tower expects to also enter into separate warrant transactions with the hedge counterparties. The
warrant transactions will separately have a dilutive effect on Towers common stock to the extent
that the market value per share of Towers common stock exceeds the applicable strike price of the
warrants. If the initial purchasers exercise their over-allotment option, Tower may enter into
additional convertible note hedge and additional warrant transactions.
In connection with establishing their initial hedges of the convertible note hedge and warrant
transactions, the hedge counterparties or their respective affiliates expect to enter into various
derivative transactions with respect to Towers common stock concurrently with or shortly after the
pricing of the offering of the notes. These activities and the repurchase of common stock by Tower
could increase (or reduce the size of any decrease in) the market price of Towers common stock
concurrently with or shortly after the pricing of the notes. In addition, the hedge counterparties
or their respective affiliates are likely to modify their hedge positions by entering into or
unwinding various derivatives
with respect to Towers common stock and purchasing or selling Towers common stock or other
securities of Tower 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 with respect to
any conversion of notes and on or around any conversion date related to a conversion of notes).
The effect, if any, of any of these transactions and activities on the market price of Towers
common stock or the notes will depend in part on market conditions and cannot be ascertained at
this time, but any of these activities could adversely affect the value of Towers common stock and
the value of the notes and, as a result, could affect holders ability to convert the notes and the
amount of cash, if any, and the number of and value of shares of Towers common stock, if any, that
holders will receive upon conversion of the notes.
This announcement does not constitute an offer to sell or a solicitation of an offer to buy
securities. The offer and the sale of the notes, the convertible note hedge, the warrants and the
shares of common stock underlying such securities have not been registered under the Securities Act
of 1933, as amended, or the securities laws of any other jurisdiction and the notes, convertible
note hedge, warrants and underlying shares of common stock may not be offered or sold absent
registration or an applicable exemption from registration requirements. This announcement contains
information about anticipated transactions, and there can be no assurance that such transactions
will be completed.
Tower Group, Inc.
Thomas Song
212-655-4789
Managing Vice President
tsong@twrgrp.com
Thomas Song
212-655-4789
Managing Vice President
tsong@twrgrp.com