The Hindu Business Line : Corus gives early conversion option to Dutch bondholders

Corus on Monday offered an early conversion option to its Dutch bondholders. In a statement on its Web Site, it announced conversion plans for the Netherlands guilder (NLG) 335 million with a coupon rate of 4.625 per cent convertible bonds and € 307 million carrying an interest rate of three per cent per annum.

The Dutch bonds, which are a legacy of Hoogovens, which had merged with British Steel to form Corus, is due for maturity on April 22, 2007, while the British bonds is to mature on January 11, 2007.

Purchase timeline

Since the purchase timeline for the listed Corus shares by Tata Steel has been scheduled to complete by January-end, Corus has now offered the option for an early conversion to the Dutch bondholders, Corus sources said. Dutch bonds may be converted some time in February 2007 and to determine a date and discuss the terms, a Hoogovens bondholders' meeting has been called on December 4 in Amsterdam.

The Dutch bonds were in issue since July 1,1997. According to the original conversion plan, each NLG 1,000 in nominal amount of Hoogovens bonds gives an entitlement to Corus shares at a conversion price of € 7.85. After conversion, it is supposed be equivalent of 1,93,38,688 Corus shares. The original plan also had stipulated that in order to convert all of the Dutch bonds, the closing share price of Corus must be at least 130 per cent of the conversion price then in effect for 30 consecutive days. Also, Corus must advise the trustee of its intention to redeem within 15 days after the 30-day period.

British bonds

The British bonds will be redeemed at 109.62 per cent of their nominal amount. Based upon a conversion price of € 6.55 per Corus ordinary share, the total increase in the number of shares will be 46,870,230 shares. According to these bond issue terms, the conversion price will represent a conversion premium of 30 per cent to the volume weighted average price of Corus ordinary shares on December 4, 2001. Interestingly, Credit Suisse First Boston, the original book runner for the bond, holds the total of the € 307-million bonds.