Aesthetic ultrasound treatment company Applisonix Ltd. (TASE:APLS) said yesterday that it would, with the consent of its bondholders, make a forced conversion of its bonds on August 14. The bonds will be converted at a rate of 2.629 convertible bonds for one common share. The rate was set in the company's prospectus for the conversion and is based on the company's average share price over the ten days prior to its announcement, less 10%.
Yesterday, with Applisonix's share trading at NIS 1.84 on the Tel Aviv Stock Exchange (TASE) the bonds had a value of NIS 0.70 per unit, against NIS 0.60 at the time the announcement was released. The conversion created an arbitrage opportunity which drove down the price of the shares, and these are now cheaper to buy by way of conversion rather purchasing directly.
While the forced conversion may have had an adverse impact on its share price, it will benefit the company itself. Following the conversion, the company will see NIS 20 million in debt written off, while at the same time strengthening its balance sheet by adding NIS 10 million in cash held until now in a trusteeship under the bond conversion agreement. The company will have to repay NIS 5 million in securities, which leave it with an extra NIS 5 million. Applisonix had a cash balance of NIS 20 million at the end of the quarter.
Shares in Applisonix dropped 34% on the TASE yesterday, closing at NIS 1.87.
Published by Globes [online], Israel business news - www.globes-online.com - on July 15, 2008
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