Company Website:
http://www.molinahealthcare.com
LONG BEACH, Calif. -- (Business Wire)
Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) announced today that
it intends to privately offer, subject to market and other conditions,
$325 million aggregate principal amount of cash convertible senior notes
due 2020. The Company also expects to grant the initial purchasers of
the notes an option to purchase up to an additional $50 million
aggregate principal amount of the notes, solely to cover
over-allotments, if any. The notes will be offered and sold only to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”).
The notes will pay interest semi-annually on January 15 and July 15 and
will mature on January 15, 2020. The notes will be convertible only in
certain circumstances and solely into cash. Upon conversion, in lieu of
receiving shares of our common stock, a holder will receive an amount in
cash, per $1,000 principal amount of Notes, at a conversion rate to be
determined. The interest rate, conversion rate, offering price and other
terms of the notes will be determined by negotiations among the Company
and the initial purchasers of the notes.
In connection with the pricing of the notes, the Company intends to
enter into privately negotiated cash convertible note hedge transactions
with one or more of the initial purchasers of the notes or their
respective affiliates (the “option counterparties”). The cash
convertible note hedge transactions are expected to offset cash payments
due upon conversion of the notes. The Company also intends to enter into
privately negotiated warrant transactions with the option
counterparties, which could have a dilutive effect to the extent that
the price of the Company’s common stock exceeds the applicable strike
price of the warrants. If the initial purchasers exercise their
over-allotment option, the Company may increase the size of the cash
convertible note hedge transactions and enter into additional warrant
transactions.
In connection with establishing their initial hedge of the cash
convertible note hedge and warrant transactions, the option
counterparties or their affiliates expect to enter into various
derivative transactions with respect to the Company’s common stock
concurrently with or shortly after the pricing of the notes. This
activity could increase (or reduce the size of any decrease in) the
market price of the Company’s common stock or the notes at that time. In
addition, the option counterparties or their affiliates may modify their
hedge positions by entering into or unwinding various derivatives with
respect to the Company’s common stock and/or purchasing or selling the
Company’s common stock or other securities of the Company in secondary
market transactions following the pricing of the notes and prior to the
maturity of the notes (and are likely to do so during any observation
period related to a conversion of notes). This activity could also cause
or avoid an increase or a decrease in the market price of the Company’s
common stock or the notes.
The Company intends to use the net proceeds to (1) pay the costs of the
cash convertible note hedge transactions described above (after such
costs are partially offset by the proceeds to the Company from the
warrant transactions described above), (2) repurchase up to $50 million
of its common stock in negotiated transactions with institutional
investors in the offering through one of the initial purchasers or its
affiliate, as the Company’s agent, concurrently with the pricing of the
offering, and (3) repay all of the currently outstanding indebtedness
under the Company’s credit facility in the amount of approximately $40
million. The remainder of the net proceeds will be used for working
capital and general corporate purposes, including possible repurchases
of the Company’s 3.75% Convertible Senior Notes due 2014. The Company’s
repurchases of its common stock could have the effect of increasing or
preventing a decline in the price of the Company’s common stock, and the
notes, concurrently with the pricing of the notes and for a period of
time following such pricing.
About Molina Healthcare
Molina Healthcare, Inc., a FORTUNE 500 company, provides quality and
cost-effective Medicaid-related solutions to meet the health care needs
of low-income families and individuals and to assist state agencies in
their administration of the Medicaid program. The Company’s licensed
health plans in California, Florida, Michigan, New Mexico, Ohio, Texas,
Utah, Washington, and Wisconsin currently serve approximately 1.8
million members, and its subsidiary, Molina Medicaid Solutions, provides
business processing and information technology administrative services
to Medicaid agencies in Idaho, Louisiana, Maine, New Jersey, and West
Virginia, and drug rebate administration services in Florida. More
information about Molina Healthcare is available at www.molinahealthcare.com.
This press release does not constitute an offer to sell, or the
solicitation of an offer to buy, any securities. The notes 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 absent registration or an applicable exemption from
registration requirements. The notes are being offered only to qualified
institutional buyers pursuant to Rule 144A under the Securities Act.
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 offer the notes or consummate the
offering, the anticipated terms of the notes and the offering, the
anticipated use of proceeds of the offering, whether and in what amount
the Company may repurchase shares of its common stock, whether the cash
convertible note hedge transaction and the warrant transactions
(including the additional cash convertible note hedge transactions and
the additional warrant transactions that the Company may enter into if
the initial purchasers exercise their option to purchase additional
notes) will become effective, 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,
2011.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, 2011, 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, 2011, and in
other reports or documents the Company files with, or furnishes to, the
SEC from time to time.
Contacts:
Molina Healthcare, Inc.
Juan Jose Orellana, 562-435-3666, ext.
111143
Investor Relations
Source: Molina Healthcare, Inc.