New York, Feb. 5 - Penn Treaty American Corp. said it issued $14 million of 6¼% subordinated convertible notes due 2008 in a private placement to accredited investors.
The new notes are identical to the company's existing 6¼% subordinated convertible notes due 2008 except that they may not be converted until after May 31 and shareholder approval of the issuance of the notes and the related shares of common stock has been obtained.
The Allentown, Pa., accident and health insurance company said the money raised will meet its parent debt servicing needs through October 2005. At that point the convertibles will mandatorily convert into common stock at a price of $1.75 if the company's stock is trading above $1.93.
Penn Treaty will hold a special meeting of shareholders on March 12 to approve issuance of the notes and the stock to be issued on conversion. If approval is not obtained, the company will repurchase the notes with additional interest.
The company plans to file a registration statement with the Securities and Exchange Commission to allow public trading of the convertibles.
On registration Philadelphia Brokerage Corp. intends to make a market in the notes as it does for Penn Treaty's existing convertibles.
Penn Treaty American had $91.432 million of the 6¼% convertibles outstanding as of Nov. 14, down due to conversions from the original $98.2 million created after issuing $32.4 million of new securities and amending its existing $65.9 million of convertibles to match the terms of the new offering.
Terms of the existing convertibles are:
| Issuer: | Penn Treaty American Corp.
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| Issue: | Convertible subordinated notes
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| Amount: | $98.2 million (original), $91.432 million (as of Nov. 14)
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| Maturity: | 2008
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| Coupon: | 6¼%
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| Conversion price: | $1.75, discounted make-whole interest payable if converted before October 2005
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| Mandatory conversion: | October 2005 onwards if stock trades above $1.93, averaged over 15 trading days
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