|Tribune staff reporterUSG Corp. said Monday that shareholders approved the conversion feature of a recent transaction by which the Chicago building-products maker received a $400 million cash infusion from investing guru Warren Buffett and a co-investor.
In November, the cash-strapped company announced that the Omaha investor had teamed up with a Canadian insurance company to buy $400 million of 10-year convertible notes issued by USG.
The deal closed in November, providing USG with a welcome cushion of cash. Because of its potential for future dilution, however, the convertability of the notes required a formal vote of approval by USG shareholders.
That's the clearance that stockholders delivered Monday.
The shares are convertible into USG common stock at a potentially lucrative price of $11.40 a share.
The notes currently pay a 10 percent annual interest rate. The deal was structured to encourage shareholders to sign off on the convertability: had the conversion rights not been approved, terms of the November by-in provided for the interest rate to jump to a hefty 20 percent.
In New York Stock Exchange trading, USG shares, which traded above $30 as recently as last summer, were trading late Monday morning up 25 cents, or 3.3 percent, at $8.09.
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