USG calls remaining 10% convertibles; holders may opt for conversion

By Marisa Wong

Madison, Wis., March 18 - USG Corp. said it issued a notice of redemption on Tuesday to redeem the remaining $75 million principal amount of its outstanding 10% contingent convertible senior notes due 2018.

USG will redeem the convertible notes on April 17 at 105 plus accrued interest to the redemption date, for a total payment of $1,087.77 per $1,000 principal amount.

In lieu of redemption, holders may elect to convert their notes into shares of USG common stock before April 17. The notes are convertible into 87.7193 shares per $1,000 principal amount, which is equivalent to a conversion price of $11.40 per share.

Based on recent trading prices, USG believes that holders will choose to convert their notes rather than receive the redemption price.

USG stock closed at $34.29 (NYSE: USG) on March 18.

If all notes are converted to shares, there will be no accrued interest paid for the period since the last interest payment date.

To the extent holders do not elect to convert their notes prior to the redemption date, the company expects to use a combination of cash, cash equivalents and borrowings under its credit facilities to fund the redemption price.

In November, USG issued a notice of redemption to redeem the initial $325 million of the $400 million notes outstanding at that time. The company said that less than all of the outstanding notes were called in order to avoid limitations to its net operating loss carryforwards under the Internal Revenue Code in the event the ownership of some stockholders changes by more than 50% over a three-year period.

The company said that due to recent trading activity it believes it can now call the remaining 10% notes without the risk of any limitation on the use of its net operating loss carryforwards.

USG is a Chicago-based manufacturer and distributor of building systems.

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