China Security to redeem $50 million in tranche A 0% convertibles

By Devika Patel

Knoxville, Tenn., Oct. 2 - China Security & Surveillance Technology, Inc. said it will use the net proceeds from a $58.5 million registered direct offering of stock to repay its $50 million in tranche A zero-coupon guaranteed senior unsecured convertible notes due 2012 for $47.5 million.

On Sept. 2, the company restructured its two 1% guaranteed senior unsecured convertible notes due 2012 into two new tranches of notes: the tranche A zero-coupon guaranteed senior unsecured convertible notes and the tranche B zero-coupon guaranteed senior unsecured notes.

The $50 million in tranche A notes mature on Sept. 2, 2012. The company will repay the principal in six consecutive semiannual installments, starting March 2, 2010, with 25%, 25% and 50% of the principal amount to be repaid in the first, second and third year, respectively.

The initial conversion price will be $10.00 per share, with periodic adjustments. The minimum conversion price allowed is $6.00 per share.

The $84 million in tranche B notes, which are not convertible, also mature on Sept. 2, 2012. The company will repay the principal amount in six consecutive semiannual installments, starting March 2, 2010, with 46%, 46% and 8% of the principal amount to be repaid in the first, second and third year, respectively.

The company may redeem the two tranches of notes at any time with no premium or penalty at par plus default interest, if any.

Located in Shenzhen, China, China Security provides security and surveillance products and services.

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