Summary
Quanta Services, Inc. (PWR) announced on April 12, 2010, its intention to redeem all outstanding 3.75% Convertible Subordinated Notes due 2026, with an aggregate principal amount of $143.75 million. The redemption is scheduled for May 14, 2010, at a price of 101.607% of the principal amount, plus accrued interest. Investors holding these notes have an option to convert them into Quanta's common stock at a conversion price of $22.41 per share, with the company satisfying a portion of the conversion value in cash and the remainder in stock.
Key Highlights
- 1Quanta Services, Inc. is redeeming its $143.75 million in outstanding 3.75% Convertible Subordinated Notes due 2026.
- 2The redemption date is set for May 14, 2010, with a redemption price of 101.607% of the principal amount, plus accrued interest.
- 3Noteholders have the option to convert their notes into Quanta common stock at a conversion price of $22.41 per share until May 12, 2010.
- 4Quanta will pay the cash portion of any conversion in cash on hand.
- 5The company anticipates a loss on extinguishment of debt between $2.4 million and $4.4 million (net of tax).
- 6This action is expected to eliminate approximately $6.5 million in annual interest expense (net of tax).
- 7The impact on diluted share count and EPS is currently indeterminable due to potential conversions.
Frequently Asked Questions
The main event is Quanta Services, Inc. issuing a notice to redeem all of its outstanding $143.75 million 3.75% Convertible Subordinated Notes due 2026. This action provides noteholders with an option to either accept the redemption or convert their notes into common stock.
Quanta expects to incur a loss on extinguishment of debt ranging from $2.4 million to $4.4 million (net of tax), which includes write-offs of deferred financing costs and a charge related to the interest-bearing component of the notes. Prospectively, the company anticipates eliminating approximately $6.5 million in annual interest expense (net of tax).
Noteholders can convert their notes into Quanta's common stock at a fixed rate of 44.6229 shares per $1,000 principal amount, equivalent to a conversion price of $22.41 per share. The deadline to exercise this option is May 12, 2010. Quanta will satisfy part of the conversion value in cash and the remainder in common stock.
No, Quanta cannot determine the precise impact on its diluted share count or diluted EPS at this time. This is because the final outcome depends on how many noteholders choose to convert their notes into common stock versus accepting the cash redemption.