8-KMaterial AgreementsFinancial EventsSecurities & Listing+1

AFFILIATED MANAGERS GROUP, INC. 8-K Report, Material Agreement (Apr 7, 2006)

Filed April 7, 2006For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported on April 7, 2006, the closing of a material definitive agreement related to a private placement of convertible trust preferred securities. On April 3, 2006, the company completed the issuance of $291 million in these securities, which are convertible into AMG common stock at an initial rate of 0.3333 shares per security, implying a conversion price of $150.00. The proceeds were used to fund the repurchase of approximately 1 million shares of AMG common stock, with remaining funds designated for general corporate purposes, including potential further share buybacks. The Trust Preferred Securities are structured with a fixed annual interest rate of 5.10%, payable quarterly. Additionally, contingent distributions may be paid under certain market price conditions after April 16, 2011. The securities mature in April 2036, with redemption options available to the company after April 15, 2011, under specific share price performance triggers. The company has provided a subordinated guarantee for these securities.

Key Highlights

  • 1Completion of a $291 million institutional private placement of convertible trust preferred securities.
  • 2Repurchase of approximately 1 million shares of AMG common stock using a portion of the issuance proceeds.
  • 3Initial conversion price of convertible trust preferred securities set at $150.00 per share.
  • 4Fixed annual interest rate of 5.10% on the trust preferred securities.
  • 5Maturity date for the trust preferred securities is April 15, 2036.
  • 6Company can redeem securities on or after April 15, 2011, if stock price exceeds 130% of conversion price for 20 out of 30 trading days.
  • 7Securities were issued in a private placement exempt from registration under Section 4(2) of the Securities Act of 1933.

Frequently Asked Questions

The primary purpose was to raise capital through a private placement. A significant portion of the net proceeds, approximately $282 million, was used to repurchase about 1 million shares of AMG's common stock. The remainder is intended for general corporate purposes, which may include additional share repurchases.

The initial conversion price is $150.00 per share. Each trust preferred security can be converted into 0.3333 shares of AMG common stock.

AMG can redeem the trust preferred securities on or after April 15, 2011. This option is available if the closing price of AMG's common stock has exceeded 130% of the then-prevailing conversion price for at least 20 trading days within any 30 consecutive trading day period.

The trust preferred securities carry a fixed annual interest rate of 5.10%, payable quarterly. There is also a provision for contingent distributions at an annual rate of 0.25% of the average market price, payable during certain periods after April 16, 2011, if the market price meets specific thresholds.