Alloy brings conversions of 5.375% debentures to $67.9 million or 98%

By Jennifer Chiou

New York, Dec. 12 - Alloy, Inc. said that a total of $67.9 million or 98% of its 5.375% senior convertible debentures have now been converted into Alloy and dELiA*s, Inc. common stock since Aug. 30.

The company has issued 2 million shares and paid varying cash premiums to induce conversions.

Alloy recorded an expense in its third-quarter financial statements of $15.8 million and will record an expense in its fourth-quarter statements of $1.9 million, both comprised of the cash premiums paid to holders, the write-off of the unamortized balance of deferred debt issuance costs and other transaction costs.

There are now $1.4 million of the convertibles outstanding.

During the fourth quarter thus far, the company said that $11.3 million of the securities have been converted.

"These conversions have created approximately $27 million in value for our shareholders, based on the debt retired less the value of the Alloy stock issued and cash premiums paid. Our free cash flow has also improved as a result of our future cash interest expense being reduced to only $75,000 on an annual basis from $3.7 million at the beginning of our last fiscal year," said Matt Diamond, chairman and chief executive officer of Alloy, in a news release.

"We continue to believe that the Company, with its projected improvement in EBITDA and free cash flow, its strong cash balance and its low debt, is strategically well positioned to create additional value for our shareholders."

Alloy previously announced on Sept. 14 that it had issued 642,327 shares in exchange for $21.5 million of the convertibles.

On Aug. 28, the New York-based marketing company amended the indenture of the 5.375% convertibles to eliminate all of the conditions to convertibility. The debentures had been contingently convertible at 110%.

As a result of the amendment, the notes are immediately convertible into shares of Alloy common stock at a conversion price of $33.50 or shares of the common stock of former subsidiary Delia*s, Inc. at $16.75.

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