Takefuji sets pricing in convertibles exchange offer, extends deadline

New York, Dec. 4 - Takefuji Corp. announced pricing in its exchange offer for its ¥70 billion 1.5% convertible bonds due 2018 and announced an extension.

Holders will receive 65% of par if they opt to receive cash in exchange for the bonds or 35% of par in cash and 65% in new bonds if they choose a combination.

The exchange will now expire at 11 a.m. ET on Dec. 8 instead of 11 a.m. ET on Dec. 2.

As of the old deadline, Takefuji said it had received offers to exchange ¥45 billion, or 64.3%, of the existing bonds.

Of the total tendered, ¥19.7 billion was for cash at a weighted average price of 68.5%. Takefuji set the clearing level at 65%. A further ¥24.35 billion tendered for cash and new bonds at a weighted average price of 37.6%. Takefuji set the clearing level at 35%. The final ¥0.95 billion submitted can be allocated t either cash or cash and new bonds at the company's discretion.

All offers submitted at or below the clearing levels will be accepted in full.

The company said that the response was below the level it had anticipated purchasing and the cash to be distributed is below the maximum amount it had set.

As a result, it has extended the exchange. Holders who submitted offers above the clearing level or those who have not previously responded will be able to participate.

Takefuji expects to announce the results on Dec. 9. Settlement is scheduled for Dec. 14.

The exchange was announced on Nov. 16.

Takefuji originally said that no more than ¥40 billion principal amount of convertibles will be purchased in the offer. That limit was increased to ¥70 billion on Nov. 27.

It said holders can elect to receive cash or a combination of cash and new 10% euro-yen bonds due April 11, 2011. The company noted that holders who are residents of Japan will only be allocated cash.

The amount of cash to be paid will be determined through a modified auction process and will be at least 50% of par for holders who choose the cash payment and at least 25% of par for holders who choose the combination payment.

The company said holders who elect to receive cash and bonds will receive a total amount that is similar to par.

No more than ¥18 billion in cash will be paid in the offer, and the maximum principal amount of new notes to be issued is ¥30 billion. The limit on new bonds was increased on Nov. 27 to ¥52.5 billion.

The company will repay 10% of the new bonds each month from July 2010 through maturity.

The expiration date of the exchange offer is Dec. 2, and the settlement date is expected to be Dec. 14.

The Tokyo-based consumer finance company said that amid poor industry conditions, its liquidity position has been adversely affected by downgrades by Moody's Investors Service and Standard & Poor's, which triggered an early repayment covenant included in some consumer loan receivables trust agreements.

In light of these circumstances, Takefuji said it is "critical" that it reduce the outstanding principal amount of the convertibles, which are putable in June.

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