Critical Path exchanges $32.8 million 5¾% convertibles for preferreds

New York, Nov. 19 - Critical Path Inc. said it has agreed to exchange $32.8 million principal amount of its 5¾% convertible subordinated notes for newly issued series E preferred shares. The transaction is with a group of investors led by Cheung Kong Group and its Hutchison Whampoa Ltd. affiliates.

Cheung Kong Group will receive 21.9 million series E preferreds on receipt of shareholder approval.

The new preferreds will pay dividends at 5¾%.

The San Francisco digital communications software and services company also announced investment entities affiliated with General Atlantic Partners LLC will buy $10 million of convertible notes and a rights offering for existing shareholders to buy $12 million of series E preferreds at $1.50 per share. Cheung Kong and General Atlantic will buy any preferreds not purchased in the rights offering.

General Atlantic's convertible notes will convert to 6.7 million shares of series E preferreds, subject to shareholder approval.

Critical Path also agreed with holders of its series D preferred shares, including General Atlantic Partners and Cheung Kong, to eliminate the participation rights in exchange for the reduction of the conversion price to $1.50 from $4.20.

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