Encore Capital Group Inc., a San Diego-based buyer and collector of defaulted credit card debt, said it completed a private placement of $172.5 million of convertible senior notes that pay 3 percent.

The firm’s notes were issued following an indenture dated June 24 among the company, its wholly-owned subsidiary Midland Credit Management Inc. as guarantor, and Union Bank as trustee.

Encore announced an initial issue of $150 million in notes followed by the buyers exercising an option to purchase an additional $22.5 million in notes July 18.

In connection with the buyers’ exercise of the options on additional notes, Encore entered into additional privately negotiated capped call transactions that reduce the potential dilution to the company’s stock and offset the cash payments should the stock price reach certain prescribed levels.

The cost of the additional capped call transactions was about $2.4 million, Encore said.

— SDBJ Staff Report