Fleetwood Making Financial Progress
Fleetwood Enterprises Inc. issued another call on Tuesday (March 30) for the redemption of trust preferred securities, providing an indication that it is making progress towards overcoming the financial difficulties that plagued the firm a few years ago, according to Lyle Larkin, vice president and treasurer.
Earlier this month, Fleetwood called for redemption of $50 million worth of 9.5% Convertible Trust Preferred Securities. The $50 million represented one-third of the $150 million in 9.5% convertible trust preferred securities that the company issued a few years ago when it was reporting substantial net losses and needed to raise cash, Larkin said.
On Tuesday, Fleetwood called for redemption of the remainder of the $150 million of securities.
They can be converted either into cash or Fleetwood common stock. Fleetwood assumes the vast majority of the securities will be converted into common stock, because the stock distributed as a result of the conversion will be worth $10.36 a share. Fleetwood stock closed at $12.43 a share in New York Stock Exchange trading Tuesday, Larkin said.
Fleetwood currently has 39.2 million shares of common stock outstanding, and if all trust preferred securities are converted into common stock, the number of outstanding Fleetwood shares would increase by around 14.5 million, Larkin said.
Converting the trust preferred securities into common stock also means Fleetwood would not be paying $14 million a year in interest to the holders of the trust preferred, he said.
Earlier this month, Fleetwood President and CEO Ed Caudill said he believed the company would report a “marginal profit” for the fourth quarter of its fiscal year 2004, which will end in late April, but that it was uncertain whether the company would be profitable for the entire fiscal year.