Bell Microproducts starts exchange for 3¾% convertibles

New York, Nov. 16 - Bell Microproducts Inc. said it has begun an exchange offer for its $110 million 3¾% convertible subordinated notes due 2024.

The San Jose, Calif., distributor of data storage products said it is making the offer in response to new accounting rules that will require it to treat the existing convertibles as if they were fully exchanged for stock when calculating diluted earnings per share.

The new convertibles will be identical to the existing ones except that on conversion Bell Microproducts will pay cash up to the principal amount and stock for the remainder. The existing notes convert into stock only.

In addition, Bell Microproducts is raising the contingent conversion threshold to 130% for the new notes from 110% for the existing securities and adding improved change-of-control protection through an increase in the conversion rate.

The notes will be exchanged on a one-for-one basis.

No fee is being offered.

The exchange runs through midnight ET on Dec. 17, according to an S-4 filing with the Securities and Exchange Commission.

Credit Suisse First Boston is dealer manager.

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