HCI GROUP, INC. (NYSE:HCI) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement. |
On March3, 2017, HCI Group, Inc. (the Company) completed its
previously announced placement of $143.75million in aggregate
principal amount of the Companys 4.25% Convertible Senior Notes
due 2037 (the Notes). The Notes were issued by the Company to
such initial purchasers in a private placement in reliance on
Section 4(a)(2) of the Securities Act of 1933, as amended (the
Securities Act).
On March3, 2017, the Company entered into an Indenture, between
the Company and The Bank of New York Mellon Trust Company, N.A.,
as trustee, relating to the issuance of the Notes. The Indenture
contains customary terms and covenants, including certain events
of default after which the Notes may be declared due and payable
immediately.
The Notes are senior unsecured obligations of the Company. The
Notes bear interest semiannually at a rate of 4.25%, payable in
cash in arrears on March1 and September1 of each year, beginning
on September1, 2017. The Notes mature on March1, 2037, unless
repurchased, redeemed, or converted in accordance with their
terms prior to such date. Prior to December1, 2036, the Notes are
convertible only upon the occurrence of specified events;
thereafter, until maturity, the Notes will be convertible at any
time. Upon conversion, the Notes may be settled, at the Companys
option, in cash, shares of the Companys common stock or any
combination thereof. On March1, 2022, March1, 2027 and March1,
2032, holders of the Notes may require the Company to repurchase
all or a portion of their notes at a cash repurchase price equal
to 50% of the principal amount of the notes, plus accrued and
unpaid interest. Holders of the Notes also have the right to
require the Company to repurchase all or some of their Notes at
50% of their principal amount, plus any accrued and unpaid
interest, upon the occurrence of a fundamental change (as defined
in the Indenture). In addition, upon the occurrence of a
make-whole fundamental change (as defined in the Indenture), the
Company may, under certain circumstances, be required to increase
the conversion rate for the Notes converted in connection with
such a make-whole fundamental change. The conversion rate for the
Notes is initially 16.2635 shares per $1,000 principal amount of
Notes, which is equivalent to an initial conversion price of
approximately $61.49 per share of the Companys common stock, and
is subject to adjustment in certain circumstances to the
Indenture. The Company may not redeem the notes prior to March6,
2022. On or after March6, 2022, the Company may redeem for cash
all or part of the Notes at a redemption price equal to the sum
of 50% of the principal amount of the Notes to be redeemed, plus
accrued and unpaid interest.
The Company used approximately $20.35million of the net proceeds
from the sale of the Notes to repurchase an aggregate of 413,600
shares of its common stock at a price of $49.19 per share from
institutional investors through one of the initial purchasers. In
addition, the Company used approximately $9.4million of the net
proceeds from the sale of the Notes to repurchase an aggregate of
191,100 shares of its common stock to a prepaid forward contract
(the Prepaid Forward Contract) with Socit Gnrale. The Prepaid
Forward Contract was executed on February28, 2017 and became
effective upon the closing of the sale of the Notes on March3,
2017. Under the Prepaid Forward Contract, the repurchased shares
are to be delivered over a settlement period in 2022. The Prepaid
Forward Contract is subject to early settlement, in whole or in
part, at any time prior to the final settlement date at the
option of Socit Gnrale, as well as early settlement or settlement
with alternative consideration in the event of certain
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corporate transactions. In the event the Company pays any cash
dividends on its common stock, Socit Gnrale will pay an
equivalent amount to the Company. The shares to be purchased
under the Prepaid Forward Contract will be treated as retired as
of the effective date of the Prepaid Forward Contract, but will
remain outstanding for corporate law purposes, including for
purposes of any future shareholder votes.
The summary of the foregoing transactions is qualified in its
entirety by reference to the Indenture, the Form of Global 4.25%
Convertible Senior Note due 2037 and the Prepaid Forward
Contract, which are filed as Exhibits 4.1, 4.2 and 10.1,
respectively, to this Current Report on Form 8-K and are
incorporated herein by reference.
| Item2.03. |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth under Item 1.01 of this Current Report
on Form 8-K is incorporated herein by reference.
| Item3.02. | Unregistered Sales of Equity Securities. |
The information set forth under Item 1.01 of this Current Report
on Form 8-K is incorporated herein by reference.
| Item9.01. | Financial Statements and Exhibits. |
(d) Exhibits. The following exhibits are being filed
herewith:
|
Exhibit Number |
Description |
|
| 4.1 |
Indenture, dated March3, 2017, between HCI Group, Inc. and The Bank of New York Mellon Trust Company, N.A. |
|
| 4.2 |
Form of Global 4.25% Convertible Senior Note due 2037 (included in Exhibit 4.1). |
|
| 10.1 |
Prepaid Forward Contract, dated February28, 2017 and effective as of March3, 2017, between HCI Group, Inc. and Socit Gnrale. |
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About HCI GROUP, INC. (NYSE:HCI)
HCI Group, Inc. (HCI) is a holding company. The Company is engaged in providing property and casualty insurance to homeowners, condominium owners, and tenants in the state of Florida through its subsidiaries. The Company operates through property and casualty insurance operations segment. The Company’s operations include Insurance Operations and Other Operations. The Company’s Insurance Operations include property and casualty insurance, and reinsurance. HCI’s Other Operations include information technology (IT) and real estate. The Company, through its subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., provides property and casualty insurance. Its real estate operations consist of properties it owns, operations located at those owned properties and investments in approximately three commercial development projects. Its IT operations are focused on developing cloud-based products or services, including Exzeo, Proplet and Atlas Viewer. HCI GROUP, INC. (NYSE:HCI) Recent Trading Information
HCI GROUP, INC. (NYSE:HCI) closed its last trading session down -0.18 at 48.84 with 150,089 shares trading hands.