Unisys Corp is making a conversion offer to holders of its 8.25% convertible subordinated notes due in the year 2006. Under the offer, holders of the notes who elect to convert their notes into common shares will receive a cash premium of $155 plus accrued interest for each note. The market value of each note based on Thursday’s last reported sale price was $2,120. Each note is convertible into roughly 145 shares of Unisys common stock. The Blue, Bell, Pennsylvania company hopes the offer is attractive enough to entice the majority of noteholders to convert. Unisys has set a target of reducing its debt by $1bn by 2000. In October, the company successfully completed a conversion of 8.25% year 2000 convertible notes, which reduced overall debt by $345m and increased shareholder equity by about the same amount (CI No 3,278). Unisys said it will take a one-time charge – based on the amount of notes held by those who accept the offer – against net income in the fourth quarter to cover the cost of the transaction. Assuming the full $294m of notes are converted, the company would take a one-time charge against fourth-quarter net income of about $46m, would issue an additional 42.8 million shares of common stock, and would save approximately $24 million in annual interest payments. Unisys currently has approximately 210 million common shares outstanding. The company said the conversion will not impact fully diluted earnings per share since the additional shares are already included in this calculation. The offer stands open until on December 8.
