NEW YORK--(BUSINESS WIRE)--MF Global Holdings Ltd. (NYSE: MF) (“MF Global”), a broker-dealer providing trading and hedging solutions, today announced that it intends to offer, in an underwritten public offering, subject to market conditions and other factors, $250 million aggregate principal amount of convertible senior notes due 2016 (the “convertible notes”). MF Global also expects to grant the underwriters a 30-day option to purchase up to an additional $37.5 million aggregate principal amount of convertible notes. The terms of the convertible notes, including the interest rate and the conversion price, will be determined by negotiations between MF Global and the underwriters.
MF Global expects to use a portion of the net proceeds from the offering of the convertible notes to fund the cost of entering into the convertible note hedge transactions described below (after such cost is partially offset by the proceeds that MF Global expects to receive from entering into the warrant transactions described below). MF Global expects to use the remainder of the net proceeds from the offering to repay outstanding indebtedness under its $1.2 billion revolving credit facility and for general corporate purposes.
In connection with the offering of the convertible notes, MF Global expects to enter into privately-negotiated convertible note hedge transactions with certain of the underwriters in the offering and/or their affiliates (in this capacity, the "hedge counterparties"). The convertible note hedge transactions will cover, subject to customary anti-dilution adjustments, the number of shares of MF Global common stock that will initially underlie the convertible notes. MF Global also expects to enter into separate, privately-negotiated warrant transactions with the hedge counterparties relating to the same number of shares of MF Global common stock. If the underwriters exercise their option to purchase additional notes, MF Global intends to enter into additional convertible note hedge transactions and additional warrant transactions with the hedge counterparties, which will initially cover the number of shares of MF Global common stock that will initially underlie the additional notes sold to the underwriters.
The convertible note hedge transactions are expected to reduce the potential dilution with respect to MF Global common stock upon conversion of the convertible notes. The warrant transactions, however, could have a dilutive effect with respect to MF Global common stock to the extent that the price per share of MF Global common stock exceeds the strike price of those warrants.
In connection with establishing their initial hedge positions with respect to the convertible note hedge transactions and the warrant transactions, MF Global expects that the hedge counterparties and/or their affiliates will enter into various cash-settled derivative transactions with respect to MF Global common stock concurrently with, or shortly following, the pricing of the convertible notes and may unwind these over-the-counter derivative transactions and purchase shares of MF Global common stock in open market transactions following the pricing of the convertible notes.
These activities could have the effect of increasing, or preventing a decline in, the market price of MF Global common stock concurrently with, or after the pricing of the convertible notes. The effect, if any, of these activities, including the direction or magnitude, on the market price of MF Global common stock will depend on a variety of factors, including market conditions, and cannot be ascertained at this time.
Goldman, Sachs & Co., Citi and Deutsche Bank Securities will act as joint book-running managers and BofA Merrill Lynch, J.P.Morgan, RBS and Sandler O’Neill + Partners, L.P. will act as co-managers for the offering of the convertible notes.
The offering of convertible notes will be made pursuant to MF Global's shelf registration statement filed with the Securities and Exchange Commission (the "SEC"). This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
You may obtain a copy of the preliminary prospectus supplement, the accompanying prospectus and the final prospectus supplement for the offering of the convertible notes, when available, from the SEC website at www.sec.gov. Alternatively, the underwriters will arrange to send you these documents if you request them by contacting Goldman, Sachs & Co. at 200 West Street, New York, NY 10282, (866) 471-2526 or emailing prospectus-ny@ny.email.gs.com, Citigroup Global Markets Inc., Brooklyn Army Terminal, 140 58th Street, 8th Floor, Brooklyn, New York 11220 (800) 831-9146 or emailing batprospectusdept@citi.com, and Deutsche Bank Securities Inc., Attention: Prospectus Department, Harborside Financial Center, 100 Plaza One, Jersey City, New Jersey 07311-3988, (800) 503-4611 or emailing prospectusrequest@list.db.com.
ABOUT MF GLOBAL
MF Global (NYSE: MF) is one of the world’s leading brokers of commodities and listed derivatives. MF Global delivers trading and hedging solutions as a broker-dealer across all major markets for futures and options, commodities, fixed income, equities and foreign exchange. The firm is one of 20 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. The firm provides access to more than 70 exchanges around the world and is a leader by volume on many of the largest derivatives exchanges. MF Global helps clients discover and capitalize on market opportunities by providing actionable insight, market expertise and deep liquidity.
Forward-Looking Statements
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Forward-looking statements in this press release, including statements relating to the Company’s future revenues and earnings, plans, strategies, objectives, expectations and intentions, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy, and some of which might not be anticipated. We caution you not to place undue reliance on these forward-looking statements. We refer you to the Company’s latest Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q on file with the SEC, and any amendments thereto, for a description of the risks and uncertainties the Company faces.