PMI starts consent solicitation for 2.5% convertibles

New York, May 16 - The PMI Group, Inc. said it has begun a consent solicitation for its 2.5% senior convertibles debentures due 2021.

The Walnut Creek, Calif. company said it is seeking to amend the convertibles' indenture to exclude Fairbanks Capital Holding Corp. and Fairbanks' subsidiaries from the definition of "designated subsidiary."

The proposed amendment would also increase the percentage of the company's total assets on a consolidated basis to 25% from 15% that a subsidiary would be required to represent to constitute a designated subsidiary.

In addition, the proposed amendment would provide that in the case of any subsidiary of the company that is not accounted for as a consolidated entity in the company's consolidated financial statements in accordance with generally accepted accounting principles in the U.S., only the company's proportionate share of the assets of such subsidiary shall be counted for purposes of this asset test.

As of March 31, 2003, the company had no subsidiaries that constituted designated subsidiaries as a result of the existing asset test described above. However, Fairbanks constituted a designated subsidiary as of Feb. 28, 2003 as a result of that asset test.

As a result of the proposed amendment, any failure to pay indebtedness at maturity or a default on debt by Fairbanks or any of its subsidiaries would not constitute events of default under the indenture. In addition, events of bankruptcy, insolvency or reorganization with respect to Fairbanks or any of its subsidiaries would not result in an event of default under the indenture.

The proposed amendment is conditioned upon, among other things, the receipt of consents from the holders of a majority in principal amount of the Debentures.

PMI will pay a consent fee of $5.00 per $1,000 principal amount of debentures for which consent is delivered.

The consent solicitation expires at 5:00 p.m. ET on May 28 unless extended.

Banc of America Securities LLC (212 933-2200 or 888 583-8900 ext. 2200) is solicitation agent for the consent solicitation and the information agent is Georgeson Shareholder Communications Inc. (212 440-9800 or 800 813-3797).

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