Hornbeck Offshore converts, redeems senior notes

Hornbeck Offshore Services Inc.

Hornbeck Offshore Services Inc. (NYSE: HOS) reports that all of its outstanding 1.625% convertible senior notes due 2026 have been converted or redeemed. Holders of approximately $249.6 million in aggregate principal amount of the notes elected to convert their notes prior to the redemption date of Nov. 15, 2013.

The conversions of these notes were settled based on the applicable conversion rate of 20.6260 shares of the company's common stock per $1,000 principal amount of notes, which equates to a conversion price of $48.48 per share, and on the volume-weighted average price of the company's common stock during the observation period of Oct. 8 through Nov. 11. 

The company satisfied its conversion obligations to these holders by paying cash equal to the aggregate principal amount of the notes converted and delivering shares of the company's common stock in settlement of all conversion obligations in excess of the principal amount (except that the company paid cash in lieu of issuing fractional shares). In total, the company delivered 728,411 shares of its common stock to the converting holders, which were provided to the company by the counterparties to the previously disclosed convertible note hedge transactions entered into in 2006 concurrently with the pricing of the notes. This prevented the equity dilution that would otherwise have resulted from the share delivery requirements of the conversion. The number of shares of the company's common stock outstanding after the conversion was the same as immediately prior to the conversion. 

The remaining $0.4 million in aggregate principal amount of the notes was redeemed at a redemption price of 100% of the principal amount thereof. The cash payment obligations related to the conversion and redemption were funded with cash on hand.

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