Meritor's Note Buyback Succeeds
Meritor Savings Bank said it received enough tenders of its 12% subordinated capital notes to consummate its purchase offer. About 94%, or $108 million, of its $115 million in outstanding notes were tendered before the offer expired Aug. 9.
Tenders of at least $92 million were required to complete the buyback. The noteholders will get $240 in cash and 180 Meritor common shares for each $1,000 face amount of notes. Meritor will pay cash of about $25.9 million and will issue about 19.4 million common shares. Meritor estimates tangible capital will increase by $88.4 million, to $158.9 million.
Deal Called Unusual for a Thrift
Wilbur Ross, an adviser to the committee representing Meritor shareholders, said this was the first time a thrift had restructed combining cash and stock to noteholders. "It's our feeling that this package may set a pattern that other thrifts with public debt outstanding may well use," Mr. Ross said.
He added that noteholders would get cash worth more than the bonds' market value, and a 35% interest in the Philadelphia-based company.