LSB to issue 2.26 million shares in exchange for $3.25 preferreds

By Jennifer Chiou

New York, March 13 - LSB Industries, Inc. said it will issue 2,262,971 shares in exchange for 305,807 shares of its $3.25 convertible exchangeable class C preferred stock, series 2.

The exchange ended at 5 p.m. ET on March 12.

In the transaction, the company was offering to issue shares of its common stock for up to 309,807 of the then 499,102 outstanding shares of its $3.25 convertible preferreds.

Holders of the exchanged shares waived a total of $7.3 million in accrued dividends, or $23.975 per share.

On March 6, the company said it obtained shareholder approval to amend the certificate of designation for the preferreds - one condition of the offer.

Under an agreement with Jayhawk Capital Management, LLC, the shareholders agreed to amend the terms of the preferreds to allow LSB Industries to acquire shares of its common stock for a period of five years without the approval of the preferred shareholders and to change the existing right of the preferred shareholders to elect two directors to the company's board of directors when dividends on the convertible preferreds are unpaid so that the right may only be exercised as long as at least 140,000 shares of the preferreds remain outstanding.

LSB previously said it will issue 7.4 common shares in exchange for each preferred share and the waiver of all rights to accrued dividends.

As previously announced, the company entered into an agreement with Jayhawk Capital and some of its affiliates, under which Jayhawk agreed to tender in the exchange offer 180,450 of the 346,662 preferred shares it owns.

As already reported, the company said that as a condition to Jayhawk's obligation to tender the shares, chairman of the board and chief executive officer Jack E. Golsen and the Golsen group will exchange only 26,467 of the 49,550 preferred shares they own.

LSB said that 193,295 shares remain outstanding.

The company's board approved the exchange offer on Jan. 29. It began on Feb. 9.

LSB is an Oklahoma City-based manufacturer of climate-control products.

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