WMS pays $200,000 incentive to induce holder to convert $25.7 million of its 2.75% convertibles

By Susanna Moon

Chicago, Oct. 5 - WMS Industries Inc. offered a holder an incentive to convert $25.7 million principal amount of its outstanding 2.75% convertible subordinated notes due 2010, according to an 8-K filing with the Securities and Exchange Commission.

WMS paid the holder $400,000 of cash consisting of $200,000 of interest earned through Oct. 2 and $200,000 as the inducement to convert the notes, which it said is less than the discounted present value of the remaining $600,000 of interest that would be earned on the notes through maturity in July 2010.

As a result of the conversion, the company said it will reduce its long-term debt by $25.7 million and increase common stock and additional-paid-in capital by $25.7 million.

The total amount of notes converted is now $105.1 million, or 90%.

WMS said on Sept. 29 that it offered an incentive to holders to convert $79.4 million principal amount, or 70%, of its outstanding 2.75% convertibles.

The company said it agreed to pay each holder in three separate agreements individually negotiated amounts of cash as inducements to convert the notes immediately.

WMS paid holders $1.1 million of cash consisting of $400,000 of interest earned through Sept. 28 and $700,000 as the inducement to convert the notes, which was reportedly less than the discounted present value of the remaining $1.7 million of interest that would be earned on the notes through maturity in July 2010.

The company had issued 6 million common shares upon conversion of the notes.

WMS is a Waukegan, Ill.-based designer, manufacturer and marketer of video and mechanical reel-spinning gaming machines and video lottery terminals.

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