Reebok plans exchange for 2% CoCo convertibles

New York, Oct. 21 - Reebok International Ltd. said it plans an exchange offer for its $350 million of 2% convertible debentures due 2024 in response to the new rule on accounting for contingent convertible securities.

The Canton, Mass., footwear maker will offer new 2% convertible debentures due 2024 that will pay the principal amount in cash and the remainder in stock on exercise of the conversion option.

Under the accounting rules, Reebok will not be required to include any shares in its calculation of fully diluted shares outstanding until its stock price exceeds the conversion price. After that, it will only have to include the number of shares that would be issued. The Financial Accounting Standards Board's new rule requires that for the existing convertibles all shares that would be issued have to be included in the calculation of diluted earnings per share even if the conversion option is not in the money and the conditions to conversion are not met.

Reebok said it will file a registration statement for the exchange offer with the Securities and Exchange Commission on Tuesday. It intends to complete the transaction before the new accounting rule becomes effective on Dec. 15.

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