The PMI Group, Inc. Announces Pricing of Common Stock and Convertible Senior Notes Offerings

WALNUT CREEK, Calif., April 27 /PRNewswire-FirstCall/ -- The PMI Group, Inc. (NYSE: PMI) today announced that it has agreed to sell in concurrent underwritten public offerings an aggregate of 77,765,000 shares of its common stock at a price to the public of $6.15 per share and $261 million aggregate principal amount of its 4.50% Convertible Senior Notes due 2020.  In connection with the offerings, PMI has granted the underwriters 30-day options to purchase up to an additional 11,664,750 shares of its common stock and up to an additional $39 million aggregate principal amount of the notes. PMI estimates the aggregate net proceeds from the concurrent offerings to be approximately $706 million (assuming no exercise of the underwriters' options to purchase additional shares of common stock and notes), after deducting underwriting discounts and commissions and estimated expenses.  The offerings represent an increase from the previously announced offering size of $400 million in common stock and $200 million in notes.  

The notes will bear interest at a rate of 4.50% per annum and will mature on April 15, 2020.   Holders may convert their notes prior to January 15, 2020, only in specified circumstances, and holders may convert their notes at any time thereafter until the second business day preceding maturity. The notes will be convertible at an initial conversion rate of 127.5307 shares of common stock per $1,000 principal amount of notes, which represents an initial conversion price of approximately $7.84 per share. Upon conversion PMI may deliver cash, shares of PMI common stock or a combination thereof, at its option. PMI may redeem the notes in whole or in part on or after April 15, 2015, if the last reported sale of PMI common stock exceeds 130% of the conversion price then in effect for 20 or more trading days in a period of 30 consecutive trading days ending on the trading day immediately prior to the date of the redemption notice.  The redemption price will be equal to the principal amount of the notes to be redeemed plus accrued but unpaid interest plus a specified "make-whole" premium.

The closing of each offering is contingent on the closing of the other, and each closing is subject to the satisfaction of customary closing conditions. PMI expects to close the transactions on or about April 30, 2010.

PMI intends to use $75 million of the aggregate net proceeds from these offerings to pay a portion of its outstanding indebtedness under its credit facility and to use approximately $45 million of the aggregate net proceeds from these offerings for working capital and general corporate purposes.  PMI expects to contribute the remaining net proceeds from these offerings to PMI Mortgage Insurance Co., PMI's principal operating subsidiary, with an amount equal to the gross proceeds from the convertible notes offering to be contributed in the form of a surplus note to be issued by PMI Mortgage Insurance Co. to PMI and the remaining amount to be contributed in the form of a contribution to capital.  PMI expects that PMI Mortgage Insurance Co. will use such amounts for working capital and general corporate purposes.

Credit Suisse Securities (USA) LLC and BofA Merrill Lynch are acting as joint book-running managers for both offerings and Dowling & Partners Securities, LLC is acting as co-manager of both offerings.

PMI has filed a registration statement with the Securities and Exchange Commission (the "SEC") for the common stock and convertible senior notes offerings.  Before you invest, you should read the applicable prospectus supplement and the accompanying prospectus for more complete information about PMI and these offerings.  When available, you may obtain these documents for free by visiting the SEC website at www.sec.gov.  In addition, when available, a copy of the prospectus supplement and accompanying prospectus for the offerings may be obtained from Credit Suisse Securities (USA) LLC, Attention: Prospectus Department, One Madison Avenue, New York, NY  10010 or by calling toll free at (800) 221-1037; or from BofA Merrill Lynch, 4 World Financial Center, New York, NY  10080, Attn: Preliminary Prospectus Department or email [email protected].

This press release is neither an offer to sell nor a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

About The PMI Group, Inc.

The PMI Group, Inc. (NYSE: PMI), headquartered in Walnut Creek, CA, provides credit enhancement solutions that expand homeownership while supporting our customers and the communities they serve. Through its wholly and partially owned subsidiaries, PMI offers residential mortgage insurance and credit enhancement products.

Cautionary Statement: Statements in this press release that are not historical facts, or that relate to future plans, events or performance are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including those related to PMI's ability to successfully complete the offerings of securities contemplated in this press release. Risks and uncertainties related to PMI and its business are discussed in our SEC filings, including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2009, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010. We undertake no obligation to update forward-looking statements.

SOURCE The PMI Group, Inc.