QUINCY, Ill. (Jan. 7, 2011)—Titan International Inc. said it has negotiated an agreement with a note holder of the company's 5.625 percent convertible senior subordinated notes, due 2017, to exchange those notes for common stock.
Titan said the two parties have privately negotiated an agreement to exchange about $59.6 million in aggregate principal amount of the convertible notes for up to approximately 6.7 million shares of the tire and wheel maker's common stock, plus a payment for the accrued and unpaid interest. The final number of shares of common stock to be exchanged will be determined based upon the volume weighted average intraday price of the common stock over a period of five consecutive trading days, beginning today. The parties plan to close the exchange Jan. 18, according to the Quincy-based company.
The notes to be converted represent about 35 percent of the outstanding principal amount. Titan said its total indebtedness will be reduced by about $59.6 million, and annual interest payments will be reduced by about $3.4 million.
Following the exchange, about $112.9 million aggregate principal amount of the convertible notes will remain outstanding.
Maurice M. Taylor Jr., Titan's chairman and CEO, called the reduction in the company's interest expense by about $3.4 million each year “a good deal for both parties and we appreciate the confidence they have in Titan's future.”
The shares of common stock to be issued in connection with the exchange agreement will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the U.S. absent registration or an applicable exemption from registration requirements, according to Titan.