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Fleetwood Enterprises Inc. announced Tuesday night (June 8) the successful completion of its call for the redemption of $38 million in 9.5% Convertible Trust II Preferred Securities.
Of the 1,725,000 shares of Trust II preferred outstanding – there is a liquidation amount $22 per security – 943,935 units were redeemed on Friday (June 4) for $22 per unit, a redemption premium of 6.333% and accrued and unpaid distributions. As a result, Fleetwood paid around $22 million in cash to the holders of those securities, which combined characteristics of debt and equity.
The remaining 781,065 units, including a number that were tendered to Fleetwood in privately negotiated transactions, were converted by the holders into 1,368,100 shares of Fleetwood common stock.
The stock of Fleetwood, a New York Stock Exchange-listed firm, closed at $13.62 a share on Friday at at $13.72 on Tuesday.
“The elimination of the last of our 9.5% convertible trust preferred securities is a landmark event for Fleetwood,” said Boyd R. Plowman, executive vice president and CFO. “With this transaction and the previously announced conversion of the Trust III convertible trust preferred securities, we have reduced our annual interest charges by $17.9 million.
“Although we paid cash for some of the securities in the current transaction,” Plowman continnued, “we believe the reduction in our fully diluted share count resulting from the cash redemptions makes this every bit as successful as the Trust III transaction, where virtually all the trust preferred shares were converted into equity.
“At the end of the day, our cash position and overall liquidity remain strong, our shareholders’ equity is improved and the elimination of the interest charges provides a lift to our income statement,” Plowman said.