Aames again extends exchange for convertibles, starts talks with senior noteholders

New York, Aug. 16 - Aames Financial Corp. again extended its exchange offer to refinance its outstanding 5.5% convertible subordinated debentures due 2006 - and added that it has begun talks with senior noteholders about buying their securities.

The offer for the convertibles will now expire at 5.00 p.m. ET on Sept. 6, pushed back from 5.00 p.m. ET on Aug. 16. It had originally been set to expire at 5.00 p.m. on June 13.

Aames said so far it has received tenders from holders of $42.7 million of the existing convertibles, down $0.1 million from the last announcement on Aug. 2. The figure is 37.5% of the amount outstanding.

Aames also said it has begun talks with holders of a majority of its 9.125% senior notes due 2003 about buying the securities.

Aames said that the trustee for the senior notes due 2003 is continuing its legal efforts to block the exchange. It is asking for a declaratory judgment that there will be a default on the notes if Aames goes ahead with the exchange - and Aames is asking for a declaratory judgment that there will not be a default. Aames said it believes the claims are without merit and intends to "vigorously defend against them."

The Los Angeles consumer finance company is offering holders $800 principal amount of new 4% convertible subordinated debentures due 2012 for each $1,000 principal amount of the existing securities. The new securities will be convertible at any time on the same terms as the old ones.

The new debentures will have a sinking fund, requiring Ames to redeem 30% of the outstanding principal amount on Dec. 15, 2002.

There will also be a change-of-control clause giving the company the option to redeem the convertibles. They will also be redeemable if Ames' 9.125% senior notes due 2003 are repaid in full or if the note indenture is modified to permit redemption.

Redemptions will be at 33.5% of the principal amount if ahead of the Dec. 15, 2002 sinking fund payment or 5% of their principal amount after that time.

Ames said the offer applies to all its existing $113.9 million of 5.5% convertibles. If all are tenders, it will issue $91.12 million of the new convertibles.

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