Beazer Homes begins exchange offers for 7.5% convertibles, 7.25% units

By Marisa Wong

Madison, Wis., Feb. 13 - Beazer Homes USA, Inc. said it launched separate exchange offers for any and all of its $57.5 million of outstanding 7.5% mandatory convertible subordinated notes due 2013 and any and all of its 3 million outstanding 7.25% tangible equity units.

Under the offers, which are intended to reduce indebtedness and lower interest expense, the company will exchange the notes and units for newly issued shares of its common stock and cash in lieu of fractional shares.

For each $25 principal amount of 7.5% convertible notes tendered and accepted in the notes exchange offer, holders will receive 5.7348 shares of common stock.

On Jan. 15, 2013, the mandatory conversion date of the notes, holders would receive up to a maximum of 5.4348 shares per note, depending on the trading price of the company's stock at that time. The notes exchange offer allows holders to receive the maximum number of shares they could receive on the mandatory conversion date plus an additional 0.3 of a share.

As for the 7.25% equity units exchange offer, holders will receive 4.9029 shares of common stock for each unit tendered and accepted.

Each unit is comprised of a prepaid stock purchase contract and a senior amortizing note due Aug. 15, 2013. As of Feb. 13, the amortizing notes have a total principal balance of $8.9 million.

At maturity, holders of the stock purchase contracts would automatically receive up to a maximum of 4.3029 shares per contract, depending on the trading price of the company's stock at that time. The units exchange offer allows holders to receive the maximum number of shares of common stock they could receive at maturity, plus an additional 0.6 of a share of common stock.

Both exchange offers are scheduled to expire at 12 a.m. ET on March 12. Tendered securities may be withdrawn at any time at or before the expiration time. The company expects the settlement date to be March 14.

Citigroup Global Markets Inc. (877 531-8365) and Credit Suisse Securities (USA) LLC (800 820-1653) are joint dealer managers for the exchange offers. D.F. King & Co., Inc. (800 859-8509 or 212 269-5550) is the information agent.

Beazer is a single-family homebuilder based in Atlanta.

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