Greater Bay Bancorp plans exchange for 0% Codes

New York, Nov. 17 - Greater Bay Bancorp said it plans to offer to exchange its $265.212 million principal amount at maturity of zero-coupon senior convertible contingent debt securities due 2024 in the Codes structure for new securities in response to a change in accounting rules.

The new convertibles will pay cash up to the accreted principal amount and the remainder in stock on conversion. The existing securities convert into stock.

In addition, the new convertibles will have takeover protection through an increase in the conversion rate up to March 23, 2009.

Greater Bay plans to file detailed documents for the offer with the Securities and Exchange Commission on Nov. 19.

The Palo Alto, Calif.-based financial services company said it is carrying out the exchange in response to new accounting rules from the Financial Accounting Standards Board which would require it to treat the existing convertibles as fully converted when calculating diluted earnings per share even if they are not in the money. By comparison, no stock from the new convertibles will be included until they reach their conversion price and then only those shares above the principal amount.

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