Molina Healthcare Inc. announced Tuesday that it has priced a $450 million debt offering.
The Long Beach company, which provides Medicaid coverage for the poor and disabled, will pay annual interest of 1.1 percent on the cash convertible senior notes, payable on Jan. 15 and July 15.
The notes mature in 2020 and can be converted to cash in certain circumstances. The conversion rate will be 25 shares of common stock per $1,000 principal amount, equivalent to a conversion price of $40.77 per share – a 25 percent premium over Molina’s Tuesday share price. Shares were up 6 percent to $32.61 in Tuesday trading.
Molina intends to use proceeds from the offering to repurchase up to $50 million of its own common stock, repay about $40 million of debt, as well to pay for other corporate purposes and hedges.
The company estimates net proceeds from the offering at about $436 million and expects to close the sales by Friday.