Countrywide exchanges further $11.63 million LYONs

New York, Oct. 13 - Countrywide Financial Corp. said it exchanged an additional $11.63 million principal amount at maturity of its Liquid Yield Option Notes due 2031.

The company issued an identical amount of new convertibles and paid a fee of $22,010.

Countrywide said the new securities are identical to those issued in its exchange offer which expired in September.

Countrywide said on Sept. 20 that holders tendered $637.2 million or 94.7% of its $675 million principal amount at maturity of LYONs due 2031.

The company issued an identical amount of new convertibles and paid a fee of $2.50 per $1,000 principal amount at maturity.

The exchange expired at midnight ET on Sept. 17.

Countrywide announced on Aug. 20 it had begun an exchange offer for all $675 million principal amount at maturity of its LYONs due 2031.

The Calabasas, Calif., mortgage banking and financial services company is offering new convertibles with the same principal amount but convertible into a mixture of cash and stock and with dividend protection.

Countrywide will also make a cash payment of $2.50 per $1,000 principal amount for tendered LYONs.

Like the existing securities, the new convertibles will carry a zero coupon, a 1% yield to maturity, mature on Feb. 8, 2031 and be callable from Feb. 8, 2006 onwards.

The new convertibles will convert into a combination of cash and stock, the cash component being set as the lesser of the accreted principal amount and the value of the stock that would be issued on conversion. The remainder will be paid in stock. The conversion ratio is currently 46.2820 after giving effect to the Aug. 30 dividend on the common stock.

The existing LYONs convert into stock only.

The new securities will have dividend protection through an adjustment to the conversion rate for quarterly stock dividends of more than 10 cents per share. The LYONs have no adjustment to the conversion rate for dividend payments.

The new convertibles will have a contingent interest provision. If triggered, the payment will equal the greater of 0.125% of their average market price and 20 cents multiplied by the conversion ratio.

The LYONs also have a contingent interest provision with payment equal to the greater of 0.125% of their average market price and cash dividends paid on the common stock multiplied by the conversion ratio.

On exercise of the put option by holders, Countrywide must pay cash for the new securities. For the LYONs, Countrywide can pay cash, stock or a combination.

Lehman Brothers was dealer manager (800 438-3242 or call collect 212 526-7343) and D.F. King & Co. Inc. was information agent (800 758-5378, banks and brokers call 212 269-5550).

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