ExpressJet buys back $7.6 million convertibles during fourth quarter

By Jennifer Chiou

New York, Feb. 18 - ExpressJet Holdings Inc. said it repurchased $7.6 million of its 11.25% convertible notes due Aug. 1, 2023 during the fourth quarter of 2008.

ExpressJet said it repurchased the notes along with 3.1 million shares under its previously announced securities repurchase program, spending $10.1 million.

The company added that about $10 million remains in the program, noting that it may make future purchases.

There is $60.8 million of notes outstanding after the repurchase.

According to ExpressJet, the tender offer and partial redemption of its then 4.25% convertible notes due 2023, now 11.25% notes, caused it to trigger Section 382 of the Internal Revenue Code in August. Section 382 limits a taxpayer's ability to use certain carryover tax attributes after a substantial, cumulative change in the ownership of the company's stock.

The net adjustments caused by Section 382 limitations on previously used deductions resulted in a $19.3 million increase to the company's deferred tax valuation allowance and a $3.1 million cash tax payment ExpressJet said it expects to pay in May.

Houston-based ExpressJet operates as a regional airline under the name Continental Express.

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