Getty Images exchanges 99% of 0.5% convertibles

New York, Dec. 15 - Getty Images Inc. said holders tendered $263 million or 99% of its $265 million principal amount of 0.5% convertible subordinated debentures due 2023 in its exchange offer for the securities.

The offer expired at 5 p.m. ET on Dec. 14.

The improved response follows a minimal level of tenders previously until Getty Images amended and extended its offer on Nov. 30.

As amended, the call on the new convertibles is provisional subject to a 125% threshold from June 13, 2008 to June 12, 2009. It switches to a hard call after that.

At the same time as the amendment, the offer was extended from Dec. 2.

As of 5 p.m. ET on Nov. 29 holders had tendered just $1.695 million of convertibles - although that was up from zero at the previous announcement.

On Nov. 16 Getty Images amended the exchange after getting a zero response from investors, adding a cash payment.

The offer was also extended to 5 p.m. ET on Dec. 2 from Nov. 30.

As of 5 p.m. ET on Nov. 15 no convertibles had been tendered.

Under the revised offer, Getty Images will pay $1.25 per $1,000 principal amount for convertibles tendered.

The Seattle imagery company announced the exchange on Nov. 1, saying it is offering new convertibles on a one-for-one basis for the existing securities.

The terms of the new convertibles are identical to the old except that they will be convertible into a mixture of cash and stock instead of just common stock and there will be improved terms for adjusting the conversion rate for cash dividends and distributions.

"We believe that changing the consideration payable upon conversion of the outstanding debentures will reduce potential volatility on our earnings per share and reduce the likelihood of dilution to our stockholders, which is in the best interests of the company and our stockholders," Getty Images said in an S-4 registration statement with the Securities and Exchange Commission.

On conversion, the new convertibles will be settled in cash up to the principal amount with the remainder being paid in stock.

The exchange is subject to a minimum of 75% ($198.75 million principal amount) of the convertibles being tendered.

Goldman, Sachs & Co. is the dealer manager (800 471-7731), and Georgeson Shareholder Communications Inc. is the information agent (banks and brokers call 212 440-9800; others call 800 460-0079).

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