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Regal Entertainment asks court to rule on correct conversion price of 3¾% convertible notes
By Ted A. Knutson
Washington, April 11 - Regal Entertainment Group said it has asked the Delaware Court of Chancery to rule on the correct adjustment to make to the conversion price of its $240 million principal amount of 3¾% convertible senior notes due May 15, 2008.
Regal's action came in the form of a class action complaint against Amaranth LLC, Amaranth Advisors, LLC and Nicholas Maounis, Amaranth Advisors' managing member, as representatives of all the note holders.
On March 21, Amaranth filed a 13-G form with the Securities and Exchange Commission stating that the conversion price adjustments made by the company in connection with the excess dividends paid on June 15, 2004, Sept.15, 2004, Dec. 15, 2004 and March 15 were incorrect.
The note indenture says numerator of the adjustment is based on the average of the volume weighted average prices for the three trading days ending on the day immediately before the ex-dividend date while the denominator is based on the average of the volume weighted average prices for the three trading days ending on the day immediately before the dividend date.
Regal said the terminology was imprecise and amended the indenture to substitute the ex-dividend date in the denominator for the dividend date.
But Amaranth disagrees and says using the ex-dividend date - as Regal did - is wrong.
By Regal's calculation, Amaranth's holdings of the notes are convertible into 5,146,542 shares but by Amaranth's calculation the number is 5,583,602 shares.
With the 12,700 shares of common stock owned by Amaranth, it would hold 8.9% of Regal's equity instead of 8.2%, according to the 13-G filing.
The Centennial, Colo.-based movie theater operator made the announcement in an 8-K filing with the Securities and Exchange Commission.
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