Geico Corp; the new holding company for Government Employees Insurance Co., announced yesterday a significant revision of its proposed exchange offer for up to 5 million shares of Geico stock. The annual interest rate will be 11 percent and the debetures offered will be a senior debt of the firm.
Starting today, the insurance firm will distribute annual reports and exchange information to stockholders detailing the previously announced debenture offering.
What is new is the annual rate of 11 percent compared with 10 1/2 percent, projected earlier. In addition, the debentures will be senior rather than subordinated debts.
Geico will offer $10 principal amount debentures maturing in 1999 in exchange for each share of common, and $20 principal amount of debentures for each share of cumulative junior preferred stock, $736 convertible series.
Geico common has been trading this week at $8.50 a share, while the preferred was quoted at $17.
Geico said yesterday that alterations to the debenture offering plans reflect "adverse changes in the bond market generally since the announcement of the proposed exchange offer on Feb. 14."
The offer will expire at 5 p.m. on March 23, and Geico said that while no more than 5 million common share equivalents are being solicited, the firm may elect to accept any or all of any amount over 5 million.