The mandatory conversion reduces debt, lowers annualized interest payments, and is expected to increase the value of the company’s shares outstanding.
“This mandatory conversion reduces the company’s annualized interest payments by approximately $3.0 million and represents a major step in deleveraging the company’s balance sheet under the opportunities provided by our new capital structure,” said Stephen H. Fraser, president and chief executive officer, in a statement.
Under the terms of the company’s recapitalization plan that was undertaken in October 2011, the Series B notes are mandatorily convertible into shares of common stock or warrants in two equal installments on the three-month and nine-month anniversaries of their issuance, subject to certain conditions.
On Jan. 10, about $18.5 million of the Series B notes were converted into 1,014,839 shares of common stock with the remainder being converted into warrants exercisable into shares of common stock.
Subject to certain conditions, the remaining approximately $49.7 million in aggregate principal amount of the Series B notes is scheduled to be mandatorily converted into shares of common stock and warrants in July 2012. The Series B notes will be automatically converted into 6 percent Series A convertible senior secured notes due 2017 on Oct. 5, 2012, if the company is unable to effect mandatory conversion before then.
