General Electric appeared to get a better reception for a new exchange offer for US $5.9bn of preferred stock, after the terms of an earlier exchange of GE Capital securities caused an investor backlash. "This deal is far better than what was provided in the first exchange," said Phil Jacoby, chief investment officer at Spectrum Asset Management, which holds some of the affected instruments.
GE hired Bank of America Merrill Lynch to conduct the new transaction, after investors claimed a forced exchange conducted through J.P. Morgan two weeks ago left them worse off. That deal replaced prefs issued by GE Capital with ones issued by GE, as part of the firm's wider reorganization.
GE on Friday offered investors the chance to switch out of the Series A, B and C prefs targeted in the first exchange and into new Series D instruments with higher dividend payments, callable in January 2021. The annual dividend rate of 5% on the new securities is up to 100bp higher than the old instruments, which are callable in 2022 and 2023. Series A and B holders will receive an extra 1bp and 0.5bp of principal, respectively.
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