Advanced Medical buys back $227 million of two series of convertibles

By Susanna Moon

Chicago, Feb. 24 - Advanced Medical Optics, Inc. repurchased $57 million principal amount of its 2.5% convertible senior subordinated notes and $170 million principal amount of its 3.25% convertible senior subordinated notes in 2008 using borrowing under its credit facility, according to a 10-Q filing with the Securities and Exchange Commission.

The company recognized a gain on debt extinguishment of $110.4 million with the note repurchases, excluding the write-off of the deferred financing costs included in interest expense.

Advanced Medical said it repurchased the notes in privately negotiated transactions from holders who contacted the company.

After the repurchases, the principal amount of convertible senior subordinated notes fell to $624.1 million at Dec. 31 from $851.1 million at Dec. 31, 2007.

The company said on Feb. 6 that it was giving notice of a fundamental change under the indentures of its 2.5% convertible senior subordinated notes due 2024, 1.375% convertible senior subordinated notes due 2025 and 3.25% convertible senior subordinated notes due 2026.

The company said that the fundamental change may occur as early as Feb. 25 as a result of the previously announced merger with Abbott Laboratories, which is holding a $22-per-share cash tender offer for Advanced Medical.

On Jan. 12, Abbott announced it would acquire Advanced Medical Optics for $2.8 billion, including net debt. Advanced Medical will continue as the surviving company and a wholly owned subsidiary of Abbott.

The company said that it is required under the note indentures to give notice of the fundamental change.

Holders could convert their notes beginning Feb. 10 until the effective date of the fundamental change. For the 2.5% convertibles, holders also were to have until 15 days after the merger date.

Santa Ana, Calif.-based Advanced Medical Optics operates in three segments: cataract surgery, Lasik and eye-care products.

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