Western Digital Corp., an Irvine computer parts maker, said it will call for redemption of its 6.75% convertible subordinated debentures on April 6 in a move that will erase about $47 million in debt from the company's books. The debt notes, which were issued last May, had originally been scheduled to expire in 2011.
Although each $1,000 in principal amount of debentures is redeemable for $1,090.94, including accrued interest, the company expects that most debenture holders will convert their notes into shares of its common stock. The debenture sale set the conversion price at $17.50 per share. The closing price of Western Digital common on the American Stock Exchange Monday was $25.25, giving debenture holders a discount of $7.75 from the current price.
Western Digital officials said they were pleased to be able to redeem the debentures through the stock conversion option since it could effectively transfer $47 million in debt to $47 million in additional equity in the company without any additional expenditures on its part.
"It makes our balance sheet stronger," said A. J. Moyer, Western Digital's chief financial officer.
Moyer said the company's stock had to remain above $26.25 for 20 consecutive business days before it could qualify to offer the conversion option to its redemption plan.