Huron Consulting Group Inc. (NASDAQ:HURN), a leading provider of
business consulting services, today announced the pricing of $225
million aggregate principal amount of convertible senior notes due 2019
(the "Convertible Notes"). The Convertible Notes were offered in a
private offering to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "Securities Act"). The
Company granted an option to the initial purchasers to purchase, within
a period of 13 days beginning on, and including, the date the
Convertible Notes are first issued, up to an additional $25 million
aggregate principal amount of Convertible Notes.
The Convertible Notes will pay interest semiannually at an annual rate
of 1.25% and will be convertible into cash, shares of the Company's
common stock or a combination thereof, at the Company's election, based
on the applicable conversion rate. The Convertible Notes have an initial
conversion rate of 12.5170 shares of the Company's common stock per
$1,000 principal amount of the Convertible Notes (which is equal to an
initial conversion price of approximately $79.89 per share of the
Company's common stock), representing an initial conversion premium of
approximately 27.5% above the closing price of $62.66 per share of the
Company's common stock on September 4, 2014. The Convertible Notes will
mature on October 1, 2019, unless earlier repurchased or converted in
accordance with their terms prior to such date. Prior to July 1, 2019,
the Convertible Notes will be convertible only upon the occurrence of
certain events and during certain periods, and thereafter, at any time
prior to the close of business on the second scheduled trading day
immediately preceding the maturity date. The Company expects to close
the offering on or about September 10, 2014, subject to the satisfaction
of various customary closing conditions.
In connection with the pricing of the Convertible Notes, the Company
entered into privately negotiated convertible note hedge transactions
with one or more of the initial purchasers or their respective
affiliates (in this capacity, the "hedge counterparties"). The
convertible note hedge transactions cover, subject to customary
anti-dilution adjustments, the number of shares of common stock
initially underlying the Convertible Notes sold in the offering. The
Company also entered into separate, privately negotiated warrant
transactions with the hedge counterparties relating to the same number
of shares of the Company's common stock, subject to customary
anti-dilution adjustments, with an initial strike price of approximately
$97.12 per share, subject to certain adjustments, which is approximately
55.0% higher than the closing price of the Company's common stock on
September 4, 2014. The warrants evidenced by the warrant transactions
will be settled on a net-share basis. If the initial purchasers exercise
their option to purchase additional notes, the Company intends to enter
into additional convertible note hedge transactions and additional
warrant transactions with the hedge counterparties, which will initially
cover, subject to customary anti-dilution adjustments, the number of
shares of the Company's common stock that will initially underlie the
additional notes sold to the initial purchasers.
The convertible note hedge transactions are intended to generally reduce
the potential dilution with respect to the Company's common stock and/or
offset any potential cash payments the Company is required to make in
excess of the principal amount of converted notes, as the case may be,
upon any conversion of the Convertible Notes in the event that the price
per share of the Company's common stock is greater than the strike price
of the convertible note hedge transactions. The Company expects that to
the extent the price per share of the Company's common stock exceeds the
strike price of the warrants, the warrant transactions could separately
have a dilutive effect with respect to the Company's common stock.
The Company estimates that it will receive net proceeds from the
offering of approximately $218.3 million (or approximately $242.6
million if the initial purchasers exercise their option to purchase
additional notes in full), after deducting the initial purchasers’
discounts and commissions and the Company’s estimated offering expenses.
The Company intends to use:
-
approximately $16.65 million of the net proceeds of the offering to
fund the cost of entering into the convertible note hedge transactions
(after such cost is partially offset by the proceeds that it receives
from entering into the warrant transactions);
-
approximately $25 million of the net proceeds of the offering to
repurchase shares of the Company's common stock concurrently with the
offering from purchasers of the Convertible Notes; and
-
the remainder of the net proceeds of the offering for working capital
and general corporate purposes.
The Company may also use a portion of the net proceeds to acquire
businesses through one or more acquisitions or other strategic
transactions. However, the Company has no current commitments or
obligations with respect to any acquisitions or other strategic
transactions.
If the initial purchasers exercise their option to purchase additional
notes, the Company intends to use a portion of the additional net
proceeds to fund the cost of entering into additional convertible note
hedge transactions (which cost will be partially offset by the proceeds
that it expects to receive from entering into additional warrant
transactions). The Company intends to use the remainder of such net
proceeds for working capital, acquisitions, and general corporate
purposes.
The Company has been advised by the hedge counterparties that in
connection with establishing their initial hedge position with respect
to the convertible note hedge transactions and warrant transactions, the
hedge counterparties and/or their respective affiliates expect to enter
into various derivative transactions with respect to the Company’s
common stock and/or purchase shares of the Company’s common stock in
privately negotiated transactions and/or open market transactions
concurrently with, or shortly after, the pricing of the Convertible
Notes. This activity could increase (or reduce the size of any decrease
in) the market price of the Company’s common stock or the Convertible
Notes at that time.
The Company has also been advised by the hedge counterparties that the
hedge counterparties or their respective affiliates are likely to modify
their hedge positions by entering into or unwinding various derivative
transactions with respect to the Company’s common stock and/or
purchasing or selling the Company’s common stock or other of the
Company’s securities or instruments, including the Convertible Notes in
secondary market transactions following the pricing of the Convertible
Notes and prior to the maturity of the Convertible Notes.
This press release is neither an offer to sell nor a solicitation of an
offer to buy the Convertible Notes or any shares of common stock
issuable upon conversion of the Convertible Notes, nor shall there be
any sale of these securities in any state or jurisdiction in which such
an offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of any such
state or jurisdiction.
The offer and sale of the Convertible Notes and any common stock
issuable upon conversion of the Convertible Notes have not been
registered under the Securities Act, or the securities laws of any other
jurisdiction, and the Convertible Notes and any such shares may not be
offered or sold in the United States, or to U.S. persons, absent
registration or an applicable exemption from registration requirements.
The offering is being made to qualified institutional buyers pursuant to
Rule 144A under the Securities Act.
The convertible note hedge transactions and warrant transactions have
not been and will not be registered under the Securities Act or the
securities laws of any other jurisdiction and may not be offered or sold
in the United States without registration or an applicable exemption
from registration requirements.
About Huron Consulting Group
Huron Consulting Group helps clients in diverse industries improve
performance, transform the enterprise, reduce costs, leverage
technology, process and review large amounts of complex data, address
regulatory changes, recover from distress and stimulate growth. Our
professionals employ their expertise in finance, operations, strategy
and technology to provide our clients with specialized analyses and
customized advice and solutions that are tailored to address each
client's particular challenges and opportunities to deliver sustainable
and measurable results. The Company provides consulting services to a
wide variety of both financially sound and distressed organizations,
including healthcare organizations, leading academic institutions,
Fortune 500 companies, governmental entities and law firms. Huron has
worked with more than 425 health systems, hospitals, and academic
medical centers; more than 400 corporate general counsel; and more than
350 universities and research institutions.
Statements in this press release that are not historical in nature,
including those concerning the Company’s current expectations about its
future requirements and needs, are “forward-looking” statements as
defined in Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) and the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are identified by words
such as “may,” “should,” “expects,” “provides,” “anticipates,”
“assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,”
“might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans”
or “continues.” These forward-looking statements reflect our current
expectations about our future requirements and needs, results, levels of
activity, performance, or achievements, including, without limitation,
current expectations with respect to, among other factors, utilization
rates, billing rates, and the number of revenue-generating
professionals; that we are able to expand our service offerings; that we
successfully integrate the businesses we acquire; and that existing
market conditions continue to trend upward. These statements involve
known and unknown risks, uncertainties and other factors, including,
among others, those described under “Item 1A. Risk Factors” in our
Annual Report on Form 10-K for the year ended December 31, 2013, that
may cause actual results, levels of activity, performance or
achievements to be materially different from any anticipated results,
levels of activity, performance or achievements expressed or implied by
these forward-looking statements. We disclaim any obligation to update
or revise any forward-looking statements as a result of new information
or future events, or for any other reason.
Copyright Business Wire 2014