Molina Healthcare, Inc. (NYSE:MOH) (the “Company”) announced today that
it has entered into separate, privately-negotiated, exchange agreements
with five holders of the Company’s outstanding 3.75% Convertible Senior
Notes due 2014 (“Existing Notes”). Pursuant to the terms of these
exchange agreements, the Company will exchange $68.872 million aggregate
principal amount of Existing Notes (which represents approximately 37%
of the outstanding Existing Notes) for $68.872 million aggregate
principal amount of new 1.625% Convertible Senior Notes due 2044 (“2044
Notes”), a certain number of shares of the Company’s common stock (with
such number rounded down to the nearest whole share for each holder and
determined based on the arithmetic average of the daily volume weighted
average prices of the Company’s common stock as published on Bloomberg
page “MOH <equity> AQR” over a 10 trading day period beginning on August
19, 2014 (such period, the “Averaging Period,” and such number of shares
of the Company’s common stock, the “Exchange Shares”)) and an amount of
cash equal to the accrued and unpaid interest on the exchanged Existing
Notes up to, but excluding the settlement date, plus the amount of
interest that would have been payable on such Existing Notes had such
Existing Notes remained outstanding until October 1, 2014. Upon
completion of this exchange, $118.128 million aggregate principal amount
of Existing Notes will remain outstanding and will be due and payable in
full by the Company on October 1, 2014. The Company will not receive any
proceeds from the issuance of the 2044 Notes and the Exchange Shares.
The 2044 Notes will mature on August 15, 2044 and will bear interest at
a rate of 1.625% per year, payable semiannually in arrears on February
15 and August 15 of each year, beginning on February 15, 2015. In
addition, beginning with the semiannual interest period commencing
immediately following the interest payment date on August 15, 2018,
contingent interest will accrue on the 2044 Notes during any semiannual
interest period in which certain conditions are satisfied. Furthermore,
additional interest of 0.25% per year will be payable on the 2044 Notes
for any semiannual interest period for which the principal amount of
2044 Notes outstanding is less than $100 million.
Holders of 2044 Notes may convert their 2044 Notes at their option at
any time prior to the close of business on the business day immediately
preceding February 15, 2044 only under certain limited circumstances. On
or after February 15, 2044 until the close of business on the second
scheduled trading day immediately preceding the maturity date, holders
may convert their 2044 Notes at any time, regardless of the
circumstances. Upon conversion, the Company will pay cash and, if
applicable, deliver shares of the Company’s common stock to the
converting holder in an amount per $1,000 principal amount of 2044 Notes
equal to the settlement amount (as defined in the related indenture).
The initial conversion rate will be based on a conversion premium of
approximately 30% above the arithmetic average of the daily volume
weighted average prices of the Company’s common stock as published on
Bloomberg page “MOH <equity> AQR” over the Averaging Period. In
connection with the exchange, the holders who are hedging their Existing
Notes may decide to adjust their hedge positions by purchasing shares of
the Company’s common stock or entering into synthetic long positions on
the Company’s common stock. These activities could have the effect of
increasing, or limiting a decline in, the market price of the Company’s
common stock during the Averaging Period.
The Company may not redeem the 2044 Notes prior to August 19, 2018. On
or after August 19, 2018, the Company may redeem for cash all or part of
the 2044 Notes, except for the 2044 Notes that the Company is required
to repurchase in connection with a fundamental change (as defined in the
related indenture) or on any specified repurchase date (as defined in
the indenture). The redemption price for the 2044 Notes will equal 100%
of the principal amount of the 2044 Notes being redeemed, plus accrued
and unpaid interest, if any, to, but excluding, the redemption date.
If the Company undergoes a fundamental change (as defined in the
indenture), holders of 2044 Notes may require the Company to repurchase
for cash all or part of their 2044 Notes at a repurchase price equal to
100% of the principal amount of the 2044 Notes to be repurchased, plus
accrued and unpaid interest to, but excluding, the fundamental change
repurchase date. In addition, holders of 2044 Notes may require the
Company to repurchase some or all of the 2044 Notes for cash on August
19, 2018, August 19, 2024, August 19, 2029, August 19, 2034 and August
19, 2039, in each case, at a specified date repurchase price equal to
100% of the principal amount of the 2044 Notes to be repurchased, plus
accrued and unpaid interest to, but excluding, the specified repurchase
date.
The Company currently expects the settlement of the transactions
contemplated by the above-referenced exchange agreements to occur on or
around September 5, 2014, subject to the satisfaction of customary
closing conditions.
The 2044 Notes, any shares of common stock issuable upon conversion of
the 2044 Notes and the Exchange Shares have not been registered under
the Securities Act of 1933, as amended (the “Securities Act”), or any
state securities law. The Company does not intend to file a shelf
registration statement for resale of the 2044 Notes, the shares of
common stock, if any, issuable upon conversion thereof or the Exchange
Shares. Accordingly, we are offering the 2044 Notes and the Exchange
Shares only to persons who are both accredited investors (within the
meaning of Rule 501 promulgated under the Securities Act) and qualified
institutional buyers (as defined in Rule 144A under the Securities Act)
in reliance on a private placement exemption from registration under the
Securities Act. This press release does not constitute an offer to sell,
or a solicitation of an offer to buy, any security and shall not
constitute an offer, solicitation or sale in any jurisdiction in which
such offering would be unlawful.
About Molina Healthcare
Molina Healthcare, Inc., a FORTUNE 500 company, provides managed health
care services under the Medicaid and Medicare programs and through the
state insurance marketplaces. Through our locally operated health plans
in 11 states across the nation, Molina currently serves approximately
2.3 million members. Dr. C. David Molina founded our company in 1980 as
a provider organization serving low-income families in Southern
California. Today, we continue his mission of providing high quality and
cost-effective health care to those who need it most. For more
information about Molina Healthcare, please visit our website at www.molinahealthcare.com.
Certain statements contained herein may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are not
historical facts and are based on current expectations, estimates and
projections about the Company's industry, management's beliefs and
certain assumptions made by management, many of which, by their nature,
are inherently uncertain and beyond our control. Accordingly,
readers are cautioned that any such forward-looking statements are not
guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict including,
without limitation, whether or not the Company will consummate the
issuance of the 2044 Notes and the Exchange Shares pursuant to the
exchange agreements and such other factors as are set forth in the risk
factors detailed from time to time in the Company’s periodic reports
filed with the Securities and Exchange Commission (“SEC”) including,
without limitation, the risk factors detailed in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2013. Since
such statements involve risks and uncertainties, the actual results and
performance of the Company may turn out to be materially different from
the results expressed or implied by such forward-looking statements. Given
these uncertainties, readers are cautioned not to place undue reliance
on such forward-looking statements. Unless otherwise required by
law, the Company also disclaims any obligation to update its view of any
such risks or uncertainties or to announce publicly the result of any
revisions to the forward-looking statements made herein. Readers
should carefully review the risks and uncertainties disclosed in the
Company's reports with the SEC, including, without limitation, those
detailed under the heading "Risk Factors" in the Company's Annual Report
on Form 10-K for the year ended December 31, 2013, and in other reports
or documents the Company files with, or furnishes to, the SEC from time
to time. This information should also be read in conjunction with
the Company's Consolidated Financial Statements and the Notes thereto
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 2013, and in other reports or documents the Company files
with, or furnishes to, the SEC from time to time.
Copyright Business Wire 2014