Richardson to buy back $12 million convertibles, pulls exchange offer due to "unfavorable" market

New York, Sept. 27 - Richardson Electronics Ltd. said its board of directors has authorized the repurchase of $12 million of its 7¼% convertible subordinated debentures due 2006 and 8¼% senior convertible subordinated debentures due 2006.

The buybacks can be in the open market or privately negotiated transactions.

The repurchases are subject to the consent of Richardson's bank lenders and will be funded with bank facility borrowings.

Timing is subject to market conditions and the company's financial condition.

The Lafox, Ill., provider of products to the radio frequency and wireless communications, industrial power conversion, security and display systems markets also said it has abandoned its previously planned exchange offer.

Richardson blamed "unfavorable market conditions and other factors."

Richardson said in March it was planning an exchange offer in which it will offer new convertibles due 2011 for its existing 7¼% convertibles and 8¼% convertibles.

The transaction was intended to improve Richardson's capital structure and reduce its cash expenditures, according to an S-4 filing with the Securities and Exchange Commission.

Specifically, Richardson is looking to reduce its interest expense, increase the likelihood of its convertible debt being exchange into stock and extend its debt maturities.

The company noted that it is unlikely it will generate enough cash to redeem the existing convertibles at their maturity in 2006.

There were $30.825 million of the 7¼% convertibles and $40 million of the 8¼% convertibles outstanding as of Nov. 30, 2003.

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