Headwaters issues new 14.75% convertibles for 2.5% convertibles

By Jennifer Chiou

New York, April 3 - Headwaters Inc. on Monday entered into privately-negotiated agreements under which it issued $3.85 million of new 14.75% convertible senior subordinated notes due Feb. 1, 2014 in exchange for about $5.5 million of its existing 2.5% convertible senior subordinated notes due 2014.

Headwaters also exchanged an additional $33.6 million of 2.5% convertibles on Friday, issuing $23.52 million more of the new notes. Following the exchanges, about $120.9 million of the old notes will remain outstanding.

In connection with the new notes, the company said it also executed an indenture and a registration rights agreement with holders of the new notes.

Wells Fargo Bank, NA is the trustee of the new notes, which bear interest at a rate of 14.75% per year.

The new notes are convertible at a rate of 48.4623 shares per $1,000 principal amount of notes, representing a conversion price of $20.63. Holders of the old 2.5% notes have a conversion rate of 33.9236 shares per $1,000 principal amount for a conversion price of $29.48.

Headwaters said it also agreed to file, within 30 days after the closing of the exchange, a shelf registration statement covering resales of the new notes.

Headwaters is a South Jordan, Utah-based diversified growth company providing products, technologies and services to the energy, construction and home improvement industries.

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