ABB offers cash incentive to induce conversion of 4.625% convertibles

By Angela McDaniels

Seattle, April 27 - ABB International Finance Ltd. said it will give a cash payment to holders of its $968 million 4.625% convertible unsubordinated bonds due 2007 who convert their convertibles into American Depositary Shares representing ordinary shares of ABB Ltd.

The offer ends at 5 p.m. CET on May 4, according to a company news release.

ABB will pay the premium to parity plus 125 basis points and accrued interest up to but excluding the payment date. The premium to parity is based on the average price of ABB ADRs on May 4, May 5 and May 8 and ranges from negative 0.36% if the ADR price reaches $16.06 to 3.80% if the ADR price is at or below $12.46.

Convertible holders will also receive the dividend due on May 8 to ADR holders and a conversion fee equal to 0.55% of the principal amount of bonds converted.

Conversion of all bonds would result in the delivery of up to 107,198,228 ADRs, which would increase the number of issued ABB shares by roughly 5%.

ABB said the offer is being made in order to strengthen the company's equity base and further reduce debt.

"This step will help us increase our equity to a level that is more in line with the needs of a global industrial company," chief financial officer Michel Demare said in the release.

"Together with our recent credit rating upgrades and our strong first-quarter results, this will improve our ability to carry out our medium-term strategy of profitable growth."

Fortis Banque Luxembourg SA (+352 4242 4599) is paying and conversion agent. Citibank NA is (212 657-7465) is the depository. Barclays Bank plc, Deutsche Bank AG, HSBC Bank plc and Citibank NA are dealer managers.

ABB is a Zurich, Switzerland-based power and automation technology company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.