Janus Capital Group Inc.
) recently entered into a privately negotiated deal in which it
will exchange about $117 million of newly issued 0.75%
Convertible Senior Notes with $110 million worth of existing
3.25% Convertible Senior Notes. The former notes will mature in
2018 and the latter in 2014.
The interest rate of 0.75% per annum on the newly issued notes
needs to be paid on a half-yearly basis. Further, under certain
conditions, these can be converted into cash or shares of Janus'
common stock, or a combination of both, according to the
The initial conversion rate of the newly issued notes is 92.0598
common shares per $1,000 principal amount of the same notes. This
amount is equivalent to an initial conversion price of
approximately $10.86 per share of common shares, subject to
certain conditions. The initial amount corresponds to a premium
of 25% to the company's closing price of $8.69 per share on Jun
The company has also entered into a privately negotiated
convertible note hedge and warrant agreement. Under the terms of
this deal, the conversion price can be increased to approximately
$12.60 per share. This represents a 45% premium to the closing
price as of Jun 13, 2013.
If the warrant agreement is used, the company will repurchase
common shares to compensate the resultant dilution. The
repurchase of common shares will rest on Janus' discretion,
subject to terms and conditions.
The aforementioned transaction will facilitate in reducing the
company's annual interest expense, extending its present debt
maturities as well as boosting financial flexibility. The
financial flexibility provided will enable the company to pay off
its long-term debt obligations whenever a suitable opportunity
arises in the future.
Janus currently carries a Zacks Rank #3 (Hold). Better performing
Artisan Partners Asset Management Inc.
Noah Holdings Limited
Virtus Investment Partners, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
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