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Hutchinson holders may put 8.5% convertibles due to fundamental change
By Marisa Wong
Morgantown, W.Va., Oct. 5 – Holders of Hutchinson Technology Inc.’s 8.5% convertible senior notes due 2019 have the right to require the company to repurchase for cash any or all of their notes on Nov. 4, according to an 8-K filing with the Securities and Exchange Commission.
The notes are putable due to a fundamental change. On Wednesday Hutchinson completed its merger with Headway Technologies, Inc.
The company will repurchase any notes that are surrendered for repurchase prior to 5 p.m. ET on Nov. 3 at par plus accrued interest to, but excluding, the repurchase date.
According to the 8-K, the company entered into a second supplemental indenture relating to the 8.5% convertible notes and in connection with the merger.
Under the supplemental indenture, the right to convert each $1,000 principal amount of convertible notes is to be changed into a right to convert those notes into the amount of cash that a holder of the number of shares of Hutchinson’s common stock equal to the conversion rate immediately prior to the merger would have been entitled to receive upon closing of the merger.
The 8.5% notes are currently convertible, the filing added. If holders choose to convert their notes from and including Oct. 5 up to and including the close of business on the day immediately preceding the fundamental change repurchase date, the conversion rate will be increased by an additional 63.75 shares of common stock for each $1,000 principal amount. In other words, during the make-whole fundamental change period, each $1,000 principal amount of convertible notes is convertible into $1,321.67.
If a holder fails to convert during the make-whole fundamental change repurchase period, that holder will not be eligible to receive the 63.75 additional shares of common stock for each $1,000 principal amount.
The company is a Hutchinson, Minn.-based maker of critical precision component technologies, including suspension assemblies for disk drives.
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