American Express may remarket, redeem 1.85% convertible debentures

By Jennifer Chiou

New York, Oct. 31 - American Express Co. said it filed a notice of potential remarketing and notice of redemption for its 1.85% convertible senior debentures due 2033.

The New York-based credit card company said it will not redeem the debentures if a remarketing event has occurred.

Before the close of business on Nov. 30, noteholders have the option to surrender the debentures at a rate equal to the average closing sales prices of American Express stock over the 10-day trading period ending on Nov. 30.

If the rate is less than or equal to the current base price of $60.32 per share, the conversion rate will be 16.5793 shares per $1,000 original principal amount of debentures.

If the rate is more than $60.32 per share, the conversion rate will increase according to a formula up to a maximum of 26.0809 shares per $1,000 original principal amount of securities.

According to the indenture, if the average closing sales prices of American Express stock over the 10-day trading period ending on Nov. 30 is less than $60.32 per share, a "remarking reset event" will occur. Subsequently, the company will no longer pay contingent interest on the convertibles, the debentures will no longer be convertible and the right of holders to put the securities will end.

If a remarketing reset event has occurred, the company elected that the securities be remarketed on Dec. 1.

J.P. Morgan Securities Inc., Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner & Smith Inc. will be the remarketing agents and they will, in the event of a remarketing reset event, will remarket the convertibles on Dec. 1 to raise proceeds at least equal to 100% of the accreted principal amount of convertibles.

If a failed remarketing occurs, or less than $50 million of debentures is to be remarketed as a result of holders opting out, the convertibles will not bear cash interest and will instead yield interest at a reset yield, which will be determined by agents so that the convertibles trade at a price equal to 100% of the accreted principal amount as of Dec. 1.

If a failed remarketing occurs on Dec. 1, holders will have the right to require American Express to purchase all or a portion of the securities at 100% of the accreted principal amount, plus accrued interest up to but excluding Dec. 1.

The paying agent and conversion agent is the trustee, U.S. Bank NA (651 495-3520).

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