Overstock.com obtains repurchase waiver for 3.75% convertibles

By Jennifer Chiou

New York, April 4 - Overstock.com, Inc. said it obtained a waiver from a holder of its 3.75% convertible senior notes, eliminating the requirement that Overstock repurchase the securities or make any payments to the noteholder, according to an 8-K with the Securities and Exchange Commission.

The Salt Lake City online closeout retailer said it paid the holder, Hamblin Watsa Investment Counsel Ltd., the investment manager for Odyssey America Reinsurance Corp. and its insurance subsidiaries, a $50,000 partial consideration for the waiver.

The note indenture included a provision requiring the company to repurchase the 3.75% convertibles following a fundamental change, which related to any acquisition by Patrick Byrne, John Byrne and/or immediate members of the Byrne family.

Overstock added that the waiver will become void after two years; if John Byrne is no longer a company director; if Patrick Byrne is no longer an executive officer of the company; if any acquisitions by either Byrne constitutes a going private transaction; if Overstock is delisted from Nasdaq; or the company's stock becomes subject to any cease trade, halt or freeze order that lasts for more than one trading day.

At September 2005, the company said Hamblin Watsa held $23.725 million of the notes and 1,377,470 Overstock shares at Dec. 31, which includes shares issuable upon conversion of the notes.

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