Titanium Metals plans exchange for 6.625% convertibles

New York, April 6 - Titanium Metals Corp. said it plans an exchange in which it will offer new 6.75% series A convertible preferred stock for its existing 6.625% convertible preferred shares in the Beneficial Unsecured Convertible Securities (BUCS) structure issued by Timet Capital Trust I.

The Denver titanium producer said the transaction will reduce debt and increase stockholders' equity.

Titanium Metals currently has 4.025 million shares of the $50 liquidation preference BUCS outstanding.

The exchange would be on a one-for-one basis. Like the existing securities, the new convertibles will have a $50 liquidation preference.

Each of the new preferred shares will be convertible into 0.2 shares of Titanium Metals stock for a conversion price of $250.00 per share. The existing convertibles have a conversion ratio of 0.1339 and a conversion price of $373.40. Titanium Metals is planning a five-for-one stock split that would reduce the conversion prices to $50.00 and $74.68, respectively. Titanium Metals stock closed at $103.00 Monday.

The BUCS are currently callable at 101.9875% of par. The new securities will be callable from 2007 onwards at par subject to the company's stock trading above the conversion price.

The BUCS mature on Dec. 1, 2026 while the new convertibles will be perpetual.

Titanium Metals will pay accrued interest on the old convertibles.

Titanium Metals said affiliates holding 1.728 million shares of the BUCS or 42.9% of the outstanding amount have indicated an interest in participating in the exchange.

The company has filed an S-4 registration statement with the Securities and Exchange Commission for the offer, but it has not yet become effective - hence there is no timing information.

The exchange is also subject to the company being able to amend it bank credit facility and approval of stockholders at a meeting scheduled for May 21.

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