HCC exchanges further $2.5 million convertibles

New York, Dec. 29 - HCC Insurance Holdings Inc. said it exchanged a further $2.5 million of its 2% convertible notes due 2021 for new convertible exchange notes.

The new notes are identical to the 2% convertible exchange notes due 2021 issued in the company's tender offer which ended on Nov. 23.

In that offer, holders tendered $172.44 million of securities.

HCC announced the exchange on Oct. 19, saying it was offering new 2% convertible exchange notes on a one-for-one basis for the original convertibles.

The new notes will have an extra year of call protection, becoming callable on Sept. 1, 2007 instead of Sept. 1, 2006 for the existing notes.

The put dates will be adjusted to Sept. 1, 2007, Sept. 1, 2011 and Sept. 1, 2016 instead of Sept. 1, 2006, Sept. 1, 2008, Sept. 1, 2011 and Sept. 1, 2016.

Holders will have additional protection in the event of a change of control. HCC will increase the conversion ratio for notes converted ahead of a cash takeover or adjust the conversion rate so that the notes convert into the stock of the acquiring company.

And the new notes can be paid in stock or a combination of cash and stock on conversion. HCC added that it has the right to make an irrevocable election to pay cash only, which it may do "depending on its analysis of recent accounting rules."

Like the old notes, the new notes will have a contingent conversion feature with a 120% threshold.

HCC is a Houston-based insurance company.

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