Fleetwood completes successful exchange offer for 5% convertibles

By Jennifer Chiou

New York, Dec. 12 - Fleetwood Enterprises, Inc. said it received tenders for $79 million of notes in the exchange offer for its $100 million 5% convertible senior subordinated debentures due 2023.

The offer ended at 5 p.m. ET on Dec. 11.

In exchange, the company will issue $81.4 million of new 14% senior secured notes and 11 million shares of its common stock.

Holders of the debentures who did not tender into this exchange offer may either retain their 5% debentures or tender them by Monday in a separate registered exchange offer. Those who tender in that separate exchange offer will receive only shares of common stock.

Fleetwood said it also has received formal notification from NYSE Regulation, Inc. that it is not in compliance with the NYSE's continued listing standard that it maintain a market capitalization of at least $25 million over a 30-trading-day period and that it have, at a minimum, either a $75 million average market capitalization or $75 million in stockholders' equity.

Fleetwood said it is looking to satisfy the continued listing standards with various options, including the successful completion of the exchange offer.

On Dec. 1, the company eliminated the payment escalation feature of the exchange offer. Previously, Fleetwood planned to implement escalation factors at participation levels of $55 million, $70 million and $85 million.

At each of these levels, the company would have provided an increase of about 67 basis points in the payment-in-kind interest rate of the new notes, subject to the 9% PIK interest cap, and about $2.2 million in stock, subject to a maximum of $10.5 million at the $0.75 minimum share price.

Because of the change, the offer was extended to Dec. 11 from Dec. 5.

At Nov. 28, no convertibles had been tendered into the offer.

The convertibles are putable on Dec. 15. Fleetwood has elected to pay stock for any puts and said it is pursuing the exchange offer in order to preserve liquidity and to avoid dilution of existing shareholders.

Exchange features

For each $1,000 principal amount of convertibles, holders who exchange will receive:

• $1,030 principal amount of new three-year senior secured notes, which are senior obligations of Fleetwood, secured by a first-priority lien on $20 million of unencumbered real estate assets of some Fleetwood subsidiaries and a junior lien on about $58 million of some subsidiaries' real properties that are pledged to secure its credit facility and guaranteed on a subordinated basis to Fleetwood's credit facility by some Fleetwood subsidiaries;

• A 14% coupon consisting of 5% payable in cash and 9% payable in kind;

• 140 shares of Fleetwood common stock, assuming that the average price of common stock during the relevant 20-trading-day period is $0.75 per share or less; and

• Accrued interest.

The exchange offer was subject to several conditions, including a declaration from the Securities and Exchange Commission that the revised registration statement is effective and a minimum tender threshold of $33.5 million.

As already noted, a holder of about $33.9 million of the convertibles planned to participate in the exchange offer, and Fleetwood planned to enter into binding agreements with this holder and one or more other holders.

The company's secured credit facility has been amended to accommodate the terms of the new senior secured notes. In particular, collateral was freed from the facility to provide security for the notes.

In late August, Fleetwood had said it believed it highly likely that holders will put back the convertibles at par and that it was working with investors to replace the convertibles. The company announced plans for the exchange offer on Oct. 21, and the offer began on Oct. 30.

Barclays Capital Inc. was the dealer manager, Bank of New York Mellon Trust Co., NA was the exchange agent, and MacKenzie Partners (800 322-2885) was the information agent.

Fleetwood is based in Riverside, Calif., and produces recreational vehicles and manufactured homes through its subsidiaries.

© 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.