Hutchinson begins tender/exchange offer for 3.25% convertibles

By Angela McDaniels

Tacoma, Wash., Jan. 10 - Hutchinson Technology Inc. is offering cash or new notes for up to $75,294,000 of its 3.25% convertible subordinated notes due 2026, according to an S-4 filing with the Securities and Exchange Commission.

As of Jan. 7, $197.5 million principal amount of the convertibles was outstanding.

For each $1,000 principal amount of convertibles accepted, eligible holders can elect to receive:

• $1,000 principal amount of new 8.5% convertible senior notes due Jan. 15, 2026, provided that if the amount of convertibles tendered exceeds $40 million, the company will accept the old convertibles tendered for exchange on a pro rata basis;

• A cash payment of $850, provided that if the cash required to purchase all of the old convertibles tendered exceeds $30 million, the company will accept the old convertibles tendered for purchase on a pro rata basis. Any old convertibles not accepted for purchase will be exchanged for new convertibles, subject to the $40 million limit described above; or

• A combination of the first two options, subject to the two limits described above.

The company also will pay accrued interest on the old convertibles up to but excluding the settlement date.

The tender/exchange offer will expire at 5 p.m. ET on Feb. 8.

New convertibles

The conversion ratio of the new convertibles will be 116.2790 shares of common stock for each $1,000 principal amount, compared with 27.4499 shares for the old convertibles.

The conversion price of the new convertibles will be $8.60 per share, compared with the old convertibles' conversion price of $36.43 and the company's closing share price of $3.69 (Nasdaq: HTCH) on Jan. 10.

The new convertibles will not be callable prior to Jan. 15, 2015 except that beginning Jan. 15, 2013, they are callable if the closing price of the company's common stock is 150% or more of the conversion price for at least 20 trading days. The old convertibles become callable on Jan. 21.

The new convertibles will be putable on Jan. 15, 2015, Jan. 15, 2016 and Jan. 15, 2021, compared with Jan. 15, 2013, Jan. 15, 2016 and Jan. 15, 2021 for the old convertibles.

The company said that subject to the satisfaction of some limited conditions, holders will be able to convert their new convertibles at any time. In comparison, the old convertibles can only be converted under certain circumstances and then only at prescribed times.

Any conversion of the new convertibles will be settled in shares. When converted, the old convertibles are settled in an amount of cash equal to the lesser of the conversion value of the converted notes and the principal amount of the converted notes plus a number of shares representing the conversion value in excess of the principal amount, if any.

The company said the purpose of the tender/exchange offer is to improve its financial flexibility by extending the first put date of a portion of its convertible debt and to reduce its overall debt.

Tendered convertibles will be canceled.

Citadel Securities, LLC (877 660-1735) is the dealer manager. Global Bondholder Services Corp. (banks and brokers call 212 430-3774, others call 866 807-2200) is the exchange and information agent.

Hutchinson Technology makes suspension assemblies for disk drives and is based in Hutchison, Minn.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.