American Equity offers cash, maybe stock for 3.5%, 5.25% convertibles

New York, Aug. 23 - American Equity Investment Life Holding Co. said it has begun exchange offers in which it will purchase for cash and possibly stock any and all of its $200 million of 3.5% convertible senior notes due 2015 and any and all of its $115,839,000 of 5.25% contingent convertible senior notes due 2029.

For each $1,000 principal amount of the 3.5% convertibles, the company will pay $143.92 plus 95% of the product of the average VWAP of its stock multiplied by 80.9486. Payment up to $1,150 per $1,000 principal amount will be made in cash, with any amounts over that level to be paid in stock at the average VWAP price. The amount paid will have a floor of $1,150 per $1,000 principal amount. American Equity will also pay accrued interest up to but excluding the settlement date.

For each $1,000 principal amount of the 5.25% convertibles, American Equity is offering $159.38 plus 95% of the product of the average VWAP of its stock multiplied by 104.4932. In this offer, payment up to $1,500 per $1,000 principal amount will be made in cash, with any additional amounts over to be paid in stock at the average VWAP price. The payment will have a floor of $1,500 per $1,000 principal amount. American Equity will also pay accrued interest up to but excluding the settlement date.

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

Final pricing will be announced by 4:30 p.m. ET on the expiration date.

The offers expire at midnight ET on Oct. 21.

J.P. Morgan Securities (800 261-5767) and Raymond James & Associates, Inc. (727 567-2400) are dealer managers. Global Bondholder Services Corp. is 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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