Australia's Amcor to convert Pacrs1 notes, offers to repurchase

New York, Jan. 24 - Amcor Ltd. said its A$400 million of Pacrs1 convertible notes to equity on April 30 but that it is also offering to buy back the securities to give investors a cash alternative.

In addition, the company will repurchase the same amount of stock as is issued on conversion of the notes.

"Today's [Wednesday's] announcement is an outcome of our commitment to manage our capital base efficiently in terms of both cost and flexibility," said chief executive officer Ken MacKenzie in a news release.

"The Pacrs1 convertible notes are now a less attractive source of funding compared to other alternatives. This initiative will result in a simpler, more effective capital structure that lowers Amcor's overall cost of capital and is expected to be earnings per share positive."

The Pacrs1 (Perpetual Amcor Convertible Reset Securities) were issued by Amcor Investments (New Zealand) Ltd. in May 2001 and have a reset date of April 30.

The number of shares to be issued on conversion will depend on the average share price during the conversion pricing period that ends in late April. Based on the current level of Amcor's stock, about 60 million shares would be issued.

Amcor is offering to buy back the Pacrs1 at a price of A$105.2632 per note with settlement on April 28. Holders who participate will receive the full A$4.2514 of interest for the final payment before the conversion date.

The buyback ends at 5 p.m. Melbourne time on March 24.

Amcor said its cash offer reflects the full value of the conversion terms.

Amcor is an Abbotsford, Victoria, Australia-based packaging company.

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