Fleetwood Enterprises Inc. today (Oct. 30) announced that it is commencing a registered exchange offer for its existing $100 million principal amount of 5% convertible senior subordinated debentures.
According to a release, holders have the right to require Fleetwood to repurchase the debentures at par on Dec. 15. The exchange offer proposes terms for new senior secured notes due 2011 that are guaranteed by certain Fleetwood subsidiaries, together with the issuance of common stock.
Separately, the company announced it has received notification from the New York Stock Exchange (NYSE) of non-compliance with the minimum share price standard. Fleetwood must return to compliance with the $1 average share price standard within six months to avoid delisting. Fleetwood stock ended Wednesday’s trading at 30 cents per share.
Regarding the exchange offer, Fleetwood said it may use cash, stock, or a combination of both to meet its 5% debenture repurchase obligations in December. However, the company has determined that it is in the best interest of Fleetwood and its constituencies to pursue this exchange offer in order to preserve liquidity and to avoid undue dilution of existing shareholders. Accordingly, the offer has “built-in incentives” to encourage a greater percentage of participation by the holders of the existing debentures.
The notes offered provide existing holders with an increase in yield, the benefits of a security interest, a three-year maturity and a limited amount of common stock while eliminating the burden on Fleetwood of the existing repurchase obligations.
According to Fleetwood, the successful completion of the exchange offer will “provide further opportunity to stabilize its businesses and strengthen its competitive position during the expected recovery of the markets for its products.”
Fleetwood noted that the offer is subject to several conditions. Details can be seen on the company’s website.