United Industrial subsidiary gives conversion notice to 3.75% noteholders

By Jennifer Chiou

New York, Oct. 26 - United Industrial Corp. wholly owned subsidiary AAI Corp. issued a notice of conversion rights to holders of its 3.75% convertible senior notes due 2024, according to an 8-K filing with the Securities and Exchange Commission.

The notice is connected to United Industrial's Oct. 8 announcement that it signed a definitive agreement to be acquired by Textron Inc. in a deal valued at roughly $1.1 billion.

Under the agreement, Textron will acquire all outstanding United Industrial common shares for $81.00 per share through a tender offer. A Textron subsidiary will then be merged into United Industrial, with United Industrial surviving the merger as a wholly owned subsidiary of Textron.

The tender offer for the shares ends at midnight ET on Nov. 13. It began on Oct. 16, and the acquisition is slated to close during the fourth quarter.

The current conversion rate is 25.4863 shares per $1,000 principal amount of 3.75% notes.

The rate may be adjusted if a person other than the company or any subsidiary distributes cash or other consideration in a tender offer for all or any portion of the stock.

United Industrial is required to give at least 20 days of notice if the conversion rate is modified.

Until 15 days after the closing of the tender offer - the tender offer conversion period - investors may convert their 3.75% notes. During the merger conversion period, which includes the 15 business days following the completion of the merger, investors may convert their holdings.

As already reported, investors were previously informed of the convertibility of their notes through the calendar quarter ending Dec. 31.

Noteholders who surrender their securities for conversion during the tender offer conversion period as well as the merger conversion period, and if Textron or another purchaser becomes the beneficial owner of 50% or more of the outstanding shares of United Industrial, will receive the repurchase event make-whole premium.

If the tender offer does not close or the merger is not completed, noteholders will not receive the make-whole premium.

United Industrial operates through its subsidiary, AAI, which will become part of Textron's Bell segment, with the majority of the business operating within Textron Systems Corp.

The boards of directors of both companies have approved the transaction.

United Industrial is based in Hunt Valley, Md., and provides aerospace and defense systems through subsidiary AAI.

Providence, R.I.-based Textron has business in the aircraft, industrial and finance industries.

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