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Cendant plans to call zero-coupon convertibles in 2004, to pay dividend in 2004
By Peter Heap
New York, Aug. 7 - Cendant Corp. said it plans to redeem its zero-coupon senior convertible contingent notes (#1) and zero-coupon convertible debentures (#2) for cash on their call dates in February 2004 and May 2004 respectively.
The New York company also said that it plans to begin paying a quarterly cash dividend in 2004, starting at seven cents per share or 28 cents per share annually. The amount is expected to increase over time as Cendant's earnings and cash flow grow.
While Cendant plans to use cash to redeem the two series of zero-coupon convertibles on their call dates, the company also noted in a filing with the Securities and Exchange Commission that holders may convert them into stock if the price of its stock exceeds set thresholds.
As of June 30, Cendant had $425 million book value of the #1 zero-coupon senior convertible contingent notes outstanding and $7 million of the #2 zero-coupon convertible debentures - the latter the amount remaining after buybacks and the exercise by holders of the put option.
Late Thursday, the #1 senior convertible contingent notes - which use the Codes structure - were quoted at 67 bid, 67.5 offered while the #2 zero-coupon convertible debentures were quoted at 101.5 bid, 101.75 offered.
The #1 senior convertible contingent notes due 2021 are callable at $655.49 per $1,000 principal amount at maturity on Feb. 13, 2004. They are also putable on the same date.
The #2 zero-coupon convertible debentures due 2021 are callable on May 4, 2004 at their accreted value of par plus adjustments if Cendant's stock trades below set levels. They are also putable on the same date.
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