The other foot

26 September 2007

Not long ago, shareholder friendly tactics, which boiled down to leveraging up to enrich shareholders, pummelled lenders. But a new convertible bond deal by Standard Pacific shows this trend may anecdotally be reversing.

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Standard Pacific priced $100m of fiveyear convertible notes with a 6% coupon and a 24.11% conversion premium on September 24. The notes are puttable under certain circumstances constituting a fundamental change to the company's business.

The company also entered into hedge transactions designed to raise the effective conversion premium to 53.9%.

Additionally, Standard Pacific lent its underwriter, Credit Suisse, 7.8m shares, which the bank will sell in order to establish short positions for buyers of the converts.

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