MGIC plans to raise capital with stock offering and debt notes
MGIC Investment Corp. announced its intention to raise about $793 million in operating capital through a stock offering and private placement of convertible junior subordinated debentures.
The company plans to offer $350 million in common stock and another $53 million of stock that are subject to a 30-day option granted to the underwriters. The Milwaukee firm also plans to raise $325 million in subordinated debentures, with an additional $65 million in debentures available as an option to initial purchasers.
Subordinated debentures usually work as debt that is convertible to shares of stock in the future, said Michael Zimmerman, MGIC’s senior vice president of investor relations.
The company said it will use the proceeds of both the stock offering and the subordinated debentures to fund the company’s operations and expand its volume of business.
MGIC has been battered by the subprime mortgage crisis. The company had a net loss of $1.67 billion in 2007, compared with net income of $564.7 million for 2006. Diluted loss per share for the full year was $20.54, compared with diluted earnings per share of $6.65 in 2006.
Earlier this year, Curt Culver, chairman and chief executive officer of the company, said MGIC incurred low loan cure rates, higher loss severities and higher delinquencies. He also said the company did not foresee net income for 2008.
Zimmerman and an MGIC spokesperson said they were not able to comment on when the company may make shares of stock available or when it would seek placement of the subordinated debentures.
WHEDA awards Wisconsin Mortgage VP
The Wisconsin Housing and Economic Development Authority (WHEDA) recently awarded John Inzeo, Wisconsin Mortgage’s Vice President, for being one of WHEDA’s top lenders in the state for 2007. In 2007, Wisconsin Mortgage wrote 206 WHEDA mortgages, totaling over $26 million in lending to first-time homebuyers in Wisconsin. This is the fifth consecutive year they have been among WHEDA’s top five lenders. 2007 marked the fifth straight year that Wisconsin Mortgage eclipsed the 200 or more WHEDA mortgages written plateau.