Grainger holders convert £87.1 million of 3.625% bonds

By Susanna Moon

Chicago, Nov. 11 - Grainger plc said it received conversion notices for another £6 million nominal, or 5.4%, of its £112 million 3.625% convertible bonds due 2014.

The total conversion notices is now for £87.1 million, or 77.8%.

The company said it will issue 10,081,013 shares by Nov. 14 in exchange for conversions from holders of its convertibles, representing an effective issue price of 562p each, or 4.5 times the closing share price the day before the announcement, as previously noted.

The company's stock (London: GRI) closed at 126p on Oct. 23 and at 95.5p on Nov. 10.

Grainger said it will save £1.6 million in interest costs as accrued interest due for payment on Nov. 14 will not be paid to bondholders who have converted.

On Nov. 5, the company said it will issue 9,386,569 ordinary shares by Nov. 13 in exchange for conversions from holders of £81.1 million of its convertibles.

The company previously said it would pay a cash payment equal to £35,000 per £100,000 in principal amount of the bonds to those who converted their securities by noon ET on Nov. 4.

The offer was announced on Oct. 24 and was extended until noon ET on Nov. 10 upon bondholder request.

Grainger previously said that during the past few weeks, a number of bondholders have contacted the company to inquire whether it could assist them to enhance the liquidity of their investment in the bonds.

Upon conversion, bondholders will receive 11,574 ordinary shares per £100,000 principal of bonds.

The company priced the upsized notes on April 25, 2007. The size of the deal was originally £100 million.

The convertibles are non-callable for the first four years, after which they may be called subject to a hurdle at 130% of the conversion price.

Grainger said that the effect of this would be to reduce reported debt by £52.7 million.

"We are pleased with the results of this early conversion process. This offer was primarily aimed at those bondholders who had some urgent need for liquidity in their investment," Andrew Cunningham, Grainger's deputy chief executive and finance director, said in a news release.

"We did not anticipate a 100% acceptance, as many of our bondholders are satisfied with their long-term interest in Grainger and we recognize the continuing involvement and support of those investors as we move forward."

Deutsche Trustee Co. Ltd. is the trustee.

Grainger is a Newcastle upon Tyne, England-based residential property company.

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