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Meritor Completes Offering Of New Convertible Senior Notes And Repurchase Of A Portion Of Existing Convertible Senior Notes Due 2026





TROY, Mich., Dec. 4, 2012 /PRNewswire-FirstCall/ -- Meritor, Inc. (NYSE: MTOR) today announced the closing of its offering of $250 million aggregate principal amount at maturity of its 7.875% convertible senior notes due 2026 (the "7.875% notes"), which includes $25 million aggregate principal amount at maturity of 7.875% notes issued pursuant to the initial purchasers' exercise in full of their option to purchase additional 7.875% notes. The offering was made to qualified institutional buyers in a private placement. The 7.875% notes have an initial principal amount of $900 per note and will accrete to $1,000 per note on December 1, 2020. The 7.875% notes also bear interest at a rate of 7.875% per year on the principal amount at maturity of the 7.875% notes, rank equally in right of payment to all of Meritor's existing and future senior unsecured indebtedness and mature on March 1, 2026.

The company used the net proceeds of approximately $218.1 million from the offering of the 7.875% notes (after discounts and estimated offering expenses) and additional cash to acquire a portion of its outstanding 4.625% convertible senior notes due 2026 (the "4.625% notes") in transactions that settled concurrently with the closing of the 7.875% note offering.  Approximately $245 million of $300 million principal amount of the 4.625% notes were acquired for an aggregate purchase price of approximately $235.7 million (including accrued interest). On or after March 1, 2016, the company may redeem the remaining 4.625% notes at its option, in whole or in part, at a redemption price in cash equal to 100% of the accreted principal amount of the 4.625% notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.  Further, holders may require the company to purchase all or a portion of their 4.625% notes at a purchase price in cash equal to 100% of the accreted principal amount of the 4.625% notes to be purchased, plus accrued and unpaid interest, on specified dates beginning on March 1, 2016 or upon certain fundamental changes. 

The 7.875% notes are convertible in certain circumstances into cash up to the principal amount at maturity of the note surrendered for conversion.  For the remainder of Meritor's conversion obligation, if any, in excess of the principal amount at maturity, the 7.875% notes will be convertible into cash, shares of Meritor common stock or a combination of cash and common stock, at Meritor's election, subject to certain limitations. The initial conversion rate, subject to adjustment, is equivalent to 83.3333 shares of common stock per $1,000 principal amount at maturity of the 7.875% notes. This represents an initial conversion price of approximately $12.00 per share. On or after December 1, 2020, the company may redeem the 7.875% notes at its option, in whole or in part, at a redemption price in cash equal to 100% of the principal amount at maturity of the 7.875% notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.  Further, holders may require the company to purchase all or a portion of their 7.875% notes at a purchase price in cash equal to 100% of the principal amount at maturity of the 7.875% notes to be purchased, plus accrued and unpaid interest, on December 1, 2020 or upon certain fundamental changes.

The 7.875% notes have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any offer or sale of these securities in any state in which such offer, solicitation or sale would be unlawful.

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