Masco to exchange 0% convertibles

New York, Nov. 12 - Masco Corp. said it will offer to exchange its $1.87 billion principal amount of zero-coupon convertible senior notes due 2031 in order to reduce dilution of its earnings per share.

The new convertibles will be identical to the old ones except that on conversion Masco will pay cash up to the accreted value and the remainder in either cash or stock. The existing notes convert into stock only.

In addition, the new securities have full dividend protection as opposed to the limited protection of the existing convertibles.

The new convertibles have a change-of-control make-whole provision unlike the existing ones.

Masco will pay an exchange fee of $1.25 per $1,000 principal amount at maturity to holders who tender.

No expiry date was set in the S-4 filing with the Securities and Exchange Commission disclosing the exchange.

Citigroup and Merrill Lynch & Co. are dealer managers for the exchange.

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