Encore Capital Group announced it will redeem all $230.0 million aggregate principal amount of its 4.00% Convertible Senior Notes due 2029 on September 24, 2026. The redemption was triggered because the company's common stock price exceeded 130% of the conversion price for the required number of trading days. Holders may convert their notes at any time before 5:00 p.m. New York City time on September 22, 2026, and conversions during this make-whole period will receive an increased conversion rate of 16.2056 shares per $1,000 principal amount, equivalent to a conversion price of approximately $61.71 per share. The company also expects to unwind and terminate the capped call transactions entered into when the notes were issued, which could result in cash or share payments to Encore and may affect the market price of its common stock.
Encore Capital Group IncRedemption of convertible notes at a premium and potential unwind of capped calls are positive for equity value.