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Grey Global receives consents from holders of 96% of convertibles
New York, March 4 - Grey Global Group Inc. and WPP Group plc said they received consents from holders of 96% of Grey's 5% contingent convertible debentures due 2033 by the close of business on March 3 to amendments related to the merger of the two companies.
Grey and WPP previously said on Feb. 25 that they had reached agreement with holders of 80.5% of Grey's 5% contingent convertible debentures due 2033 on the post-merger treatment of the securities.
The investors have agreed to deliver consents in a solicitation while the companies have agreed to conduct the solicitation.
The two sides had been at loggerheads over the terms of the convertibles following WPP's planned acquisition of Grey, with a committee representing holders threatening litigation and WPP threatening to go directly to the trustee for the debentures.
Under the agreement, the consent fee in the solicitation will be $23.33 per $1,000 principal amount.
Among the changes to be made in the solicitation is that following the merger the convertibles will be putable at par on Oct. 28, 2008, Oct. 28, 2010 and Oct. 28, 2013.
After the merger, each $1,000 principal amount will be convertible into a combination of cash and stock. The cash component will be $1,045.60 multiplied by one minus the pro-ration factor, which is the proportion of Grey shares converted into WPP stock in the merger, with a floor of 0.5. The remainder - $1,045.60 multiplied by the pro-ration factor - will convert into stock at $8.84 per WPP ordinary share.
There will be dividend protection through a conversion ratio adjustment.
Grey Global is a New York advertising firm. WPP is a London advertising agency.
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