American Equity wraps exchange offers for 3.5%, 5.25% convertibles

By Susanna Moon

Chicago, Oct. 22 - American Equity Investment Life Holding Co. said holders tendered for exchange $72,338,000, or 36.17%, of its $200 million of 3.5% convertible senior notes due 2015 and $29,616,000, or 25.57%, of its $115,839,000 of 5.25% contingent convertible senior notes due 2029.

The company accepted all the notes tendered for exchange by the end of the offer at midnight ET on Oct. 21, according to a press release. The offers began on Aug. 23.

The company said it expects to settle the exchange offers on Oct. 24 with a payment of $83,463,194 in cash including accrued interest and 2,079,295 shares in exchange for the 3.5% convertibles and with a payment of $45,020,106 in cash including accrued interest and 1,039,485 shares in exchange for the 5.25% notes.

After settlement, about $127,662,000 principal amount of 3.5% convertibles and about $86,223,000 principal amount of 5.25% notes will remain outstanding.

Pricing details

As announced Oct. 21, pricing was set at $1,750 for each $1,000 principal amount of the 3.5% convertibles, using an average volume weighted average price of $20.8918.

The company will pay cash of $1,150 per $1,000 principal amount and 28.74 shares of the company's common stock, which is the number of shares equal to the quotient of the total value of the payment less the $1,150 cash payment, divided by the average VWAP.

As previously announced, the payment was set using $143.92 plus 95% of the product of the average VWAP of its stock multiplied by 80.9486 for each $1,000 principal amount of the 3.5% convertibles.

For the 5.25% convertibles, pricing was set at $2,233.28 per $1,000 principal amount, using a VWAP of $20.8918, the company said.

The company will pay cash of $1,500 per $1,000 principal amount and 35.1 shares, which is a number of shares equal to the quotient of the total value of the payment less the $1,500 cash payment, divided by the average VWAP.

For each $1,000 principal amount of the 5.25% convertibles, American Equity offered $159.38 plus 95% of the product of the average VWAP of its stock multiplied by 104.4932.

American Equity will also pay accrued interest up to but excluding the settlement date.

In both offers, the average VWAP was calculated as the average of the daily VWAPs in the averaging period divided by 40. Measurement began on the 39th trading day before the expiration date and end on the expiration date. The daily VWAP was the per-share volume-weighted average price of American Equity's common stock on the New York Stock Exchange.

J.P. Morgan Securities LLC (800 261-5767) and Raymond James & Associates, Inc. (727 567-2400) were dealer managers. Global Bondholder Services Corp. was the information agent (banks and brokers call 212 430-3774; others call 866 924-2200).

American Equity is a West Des Moines, Iowa-based underwriter of index and fixed-rate annuities.

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