Fleetwood Enterprises Inc. completed a portion of its planned financial restructuring with the successful redemption on Thursday (April 8) of $50 million worth of its 9.5% convertible trust preferred securities.
The RV and manufactured home builder intends to redeem the remaining $100 million of its 9.5% convertible trust preferred securities on April 29.
Fleetwood gave the holders of the securities the option of taking cash or Fleetwood common stock in exchange for their securities.
Fleetwood issued the securities a few years ago after the company reported significant losses and needed to raise cash. The fact Fleetwood now has enough available cash to offer to redeem the securities shows the company has made significant progress toward overcoming its financial difficulties, said Lyle Larkin, vice president and treasurer.
However, Fleetwood assumes most of the holders of the securities will choose Fleetwood common stock, instead of cash, Larkin said. That is because the securities can be swapped for Fleetwood common at a rate of $10.36 per share. But Fleetwood stock closed at $14.30 a share on Thursday. American markets were closed on Good Friday.
Fleetwood had 39.2 million common shares outstanding, but if all $150 million worth of trust preferred securities are exchanged for stock, the number of Fleetwood outstanding shares would increase by 14.5 million.