Masco exchanges 99.8% of 0% convertibles

New York, Dec. 20 - Masco Corp. said it exchanged $1.871 billion or 99.8% of its $1.875 billion principal amount at maturity of zero-coupon convertible senior notes due 2031 under an offer intended to reduce dilution of its earnings per share.

Masco began the offer on Nov. 18, saying the new convertibles will be identical to the old ones except that on conversion Masco will pay cash up to the accreted value and the remainder in either cash or stock. The existing notes convert into stock only.

In addition, the new securities have full dividend protection, as opposed to the limited protection of the existing convertibles.

The new convertibles have a change-of-control make-whole provision, unlike the existing ones.

Masco will pay an exchange fee of $1.25 per $1,000 principal amount at maturity to holders who tender.

The offer expired at midnight ET on Dec. 17.

Citigroup and Merrill Lynch & Co. are dealer managers for the exchange. J.P. Morgan Trust Co. NA is exchange agent (800 275-2048 or 214 468-6494).

Masco is a Taylor, Mich., manufacturer of home improvement and building products.

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