American Airlines gives mandatory conversion notice for preferreds

By Jennifer Chiou

New York, Jan. 8 - American Airlines Group Inc. provided notice to holders of its series A convertible preferred stock that 41,963,700 shares of the preferreds will be converted into common shares. The conversion is to be processed on Jan. 9.

Under this mandatory conversion, holders will have about 26.6% of their preferreds converted.

The mandatory conversion mechanism is contained in the certificate of designations, according to a news release.

The company used a conversion price of $25.3863 in calculating the common shares to be issued. Each preferred will be converted into 0.9899 common shares.

For each $1,000 of preferreds, holders will receive 39.39 shares of common stock.

The next mandatory conversion date is slated for Feb. 7, when an additional 41,963,700 preferreds will convert to common stock. The conversion ratio will be determined based on the volume-weighted average price of American Airlines for the five trading days prior to Feb. 7.

The second optional conversion period will begin on Jan. 14.

Additional distributions

Holders of AMR Corp.'s 6.25% convertible senior notes due 2014 who elected to be treated as if they held AMR common stock will receive 14.4563 shares of American Airlines for each $1,000 principal amount of notes.

In addition, holders of AMR's 4.5% convertible senior notes due 2024 who elected to be treated as if they held AMR common stock will receive 6 American Airlines shares for each $1,000 principal amount of notes.

These transactions are also slated for Jan. 9.

In other news, roughly 1.1 million shares are being distributed to employees as part of the labor common stock allocation.

The American Airlines holding company is based in Fort Worth.

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