Integrated Electrical convertible holders claim company must buy back notes

By Caroline Salls

Pittsburgh, Jan. 25 - The holders of Integrated Electrical Services, Inc.'s outstanding series A and series B 6.5% senior convertible notes due 2014 said a termination of trading occurred under the notes indenture after IES failed to tell them that the New York Stock Exchange had suspended its common stock listing, meaning the company is required to repurchase the notes.

According to an 8-K filing with the Securities and Exchange Commission, under the notes' indenture, a termination of trading occurs if the company's stock, into which the notes are convertible, is not listed or approved for listing on any stock exchange.

The company's stock was suspended from trading on the New York Stock Exchange on Dec. 15, and the NYSE applied to the SEC to de-list the company's stock.

On Dec. 30, Integrated Electrical appealed the NYSE's staff's decision.

According to the 8-K, the company believes that the stock it has not ceased to be listed on the NYSE for the purposes of determining whether a termination of trading has occurred until the NYSE de-lists the stock.

The noteholders said the company was required to tell them about occurrence of a termination of trading within 15 business days after Dec. 15, and the company failed to do so.

The filing said if a termination of trading did occur on Dec. 15, Integrated Electrical's failure to inform the noteholders constitutes an event of default under the indenture.

If a termination of trading did occur, the company would be required to repurchase the notes by Feb. 7.

If an event of default occurred, the holders of at least 25% of the notes have the right to declare the notes immediately due and payable.

In either case, the amount due under the notes would be about $51 million, and the company said it would not be able to make the payment.

For now, the noteholders have elected not to accelerate payment on the notes.

The company previously announced that it is considering filing a consensual Chapter 11 plan of reorganization under a non-binding agreement in principle reached with an ad hoc committee of holders of its senior subordinated notes.

Under the agreement in principle, the convertible notes would be reinstated or the holders would recover the full value of their claims.

Integrated Electrical Services is a Houston-based provider of electrical solutions to the commercial and industrial, residential and service markets.

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