Foster Wheeler Files Terms for Equity for Debt Exchange

Foster Wheeler Ltd. has filed the terms of its proposed equity for debt exchange offer with the Securities and Exchange Commission (SEC). If the exchange offer is executed as proposed and at minimum required participation levels, it would reduce Foster Wheeler's existing debt by nearly $500 million, extend the maturities on $150 million of debt to 2011 and reduce interest expense by approximately $30 million per year. The exact amounts will depend on the terms of the final offer, as declared effective by the SEC, and actual participation levels.

"This filing marks an important step towards completing our balance sheet restructuring," said Raymond J. Milchovich, chairman, president and chief executive officer. "We appreciate the confidence in the company's future that will be expressed by those investors who accept equity in the newly capitalized company in exchange for debt. Upon completion of the exchange as proposed, our debt would be reduced by nearly $500 million with a corresponding reduction in interest payments. The debt reduction, together with the sale of new notes to retire our funded bank debt, would eliminate any material scheduled debt maturities over the next five years, improving our financial position and providing financial flexibility as we move ahead. Our goal is to complete the exchange offer by the end of May."

The proposed exchange offer, as described in the registration statement filed with the SEC, includes the exchange of (i) senior secured debt due 2005 for a combination of equity and new senior secured debt due 2011; (ii) convertible debt and Robbins bonds for equity; and (iii) trust preferred securities for cash or equity at the option of the holder. The completion of the exchange offer is subject to, among other things, clearance of the registration statement by the SEC and state securities commissions, and attaining certain minimum participation thresholds.

As previously announced, Foster Wheeler has obtained a commitment from a group of institutional holders of its debt securities to purchase $120 million of new senior secured notes due 2011, contingent on the closing of the exchange offer on terms satisfactory to such institutional holders. The proceeds will be used to repay the term and revolving debt outstanding under Foster Wheeler's existing credit agreement.

"We believe we have built the foundation for successful performance with the operational initiatives we have put in place," continued Mr. Milchovich. "Foster Wheeler has a long history of delivering exceptional quality, service and technology to a sophisticated client base worldwide. The significantly improved balance sheet from this recapitalization will provide better support for our global operating companies to compete favorably and to achieve their full business potential."

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