Corning to buy $834 million convertibles in tender

New York, June 5 - Corning Inc. said it expects to buy $834 million principal amount at maturity of its zero-coupon convertible debentures at a price of $747.50 per $1,000 principal amount at maturity, based on preliminary results of its modified dutch auction tender offer.

The price is towards the upper end of the range of $725 to $750 set by Corning.

The offer expired at midnight ET on June 4.

Corning said that $848 million principal amount at maturity of the convertibles were tendered at or below the purchase price including $35 million tendered by notice of guaranteed delivery. Because the amount tendered is higher than the amount being accepted for payment, Corning will pro rate offers using a factor of approximately 98%.

The Corning, N.Y. technology company said it expects to pay for the convertibles by June 12.

The company will use $623 million in cash.

"The debt reduction from this tender offer combined with our other actions has allowed Corning to reduce its debt by approximately $2 billion over the past 17 months," said James B. Flaws, vice chairman and chief financial officer, in a news release. "This reduction in leverage combined with our objective of returning Corning to profitability later this year, is all part of our plan to regain investment-grade ratings."

J.P. Morgan Securities Inc. (866 834-4666) and Banc of America Securities LLC (888 583-8900 ext. 2200) are joint dealer managers for the tender. Georgeson Shareholder Communications Inc. (800 849-4134) is the information agent and Alpine Fiduciary Services, Inc. is the depositary.

Union Pacific to redeem $500 million convertibles

New York, June 5 - Union Pacific Corp. said it will redeem $500 million of its remaining $1 billion 6¼% convertible preferred Term Income Deferrable Equity Securities (Tides) issued through Union Pacific Capital Trust on July 7.

The Tides will be redeemed at $50.52 which includes a 1% redemption premium plus accrued interest to July 7.

The Omaha, Neb. transportation company originally sold the convertibles on April 1, 1998 at $50.

Funds for the redemption will come from Union Pacific's recent issue of $500 million of debt at an average yield of 4.42%.

The refinancing will save $9 million in interest costs per year and cut the full-year dilutive effective of the Tides by 7.3 million shares.

Union Pacific said the redemption is part of its efforts to improve free cash flow by taking advantage of interest rates that are at 40-year lows.

The trustee for the Tides is Bank of New York (212 815-5091).

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.