Johnson Controls accepts tenders for $400.4 million 6.5% convertibles

By Jennifer Chiou

New York, Sept. 18 - Johnson Controls, Inc. announced the receipt and acceptance of tenders for exchange from holders of $400.4 million, or about 99.5%, of its 6.5% convertible senior notes due 2012.

The offer to issue cash and common stock for any and all of the notes ended at 11:59 p.m. ET on Sept. 17.

As a result, Johnson Controls will issue about 35.8 million shares and pay about $61.2 million in cash for the tendered convertibles.

On Sept. 11, the company announced the extension of the exchange offer for up to 8.55 million of its equity units in the form of corporate units to 5 p.m. ET on Sept. 25 from 11:59 p.m. ET on Sept. 17.

As already noted, the company is not offering to exchange any equity units in the form of Treasury units.

For each $1,000 principal amount of convertibles, the company was offering 89.3855 shares of common stock, $120 in cash and accrued interest up to but excluding the settlement date.

For each equity unit, Johnson Controls is offering 4.8579 shares of common stock and $6.50 in cash. Because of the prolonged deadline, settlement for the units is slated for Sept. 30 after the quarterly cash distribution payment and, as a result, the distribution consisting of the pro rata share of accrued interest on the company's 11½% subordinated notes due 2042 that form a part of the corporate units up to but excluding the settlement date will not be paid in the offer.

The company originally issued $402.5 million principal amount of the convertibles and 9 million corporate units in March 2009.

The notes are convertible at an initial conversion rate of 89.3855 shares per $1,000 principal amount.

Each corporate unit consists of a purchase contract obligating the holder to purchase from the company shares of its common stock and a 5% undivided beneficial interest in $1,000 principal amount of the subordinated notes, owned by the holder but pledged to the company to secure the holder's obligations under the purchase contract.

Johnson Controls previously said it is holding the offers in order to reduce the amount of its outstanding debt and related ongoing interest expense.

The completion of each exchange offer is subject to the effectiveness of the registration statement relating to the exchange offers, which was filed Aug. 20 with the Securities and Exchange Commission but has not yet become effective, and, in the case of the corporate units exchange offer, the continued listing on the New York Stock Exchange of the corporate units that remain outstanding after the exchange offer.

Neither offer is conditioned on the completion of the other or on the tender of any minimum number of securities.

Bank of America Merrill Lynch (646 855-3401 or 888 292-0070) and Barclays Capital Inc. (212 528-7581 or 800 438-3242) are the joint-lead dealer managers, and Citi is the co-dealer manager.

Global Bondholder Services Corp. (212 430-3774 or 866 389-1500) is the information and exchange agent.

Milwaukee-based Johnson Controls is an automotive and commercial building supplier.

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