Tiger Plans New Stock Issue to Pay Part of a Unit’s Debt

Tiger International Inc. said Monday that it and a group of banks have reached a proposed settlement of a $132-million debt that will require Tiger to issue 6 million new shares of convertible stock.

The debt is a promissory note issued by Tiger to its rail-car subsidiary, North American Car Corp., and pledged to a group of 30 U.S. and foreign banks. The banks threatened to call the note in mid-November, and North American subsequently filed for protection under Chapter 11 of the U.S. Bankruptcy Code.

Proceeds from the sale of the 6 million shares of depository convertible preferred stock, each share of which would be convertible into one share of Tiger common, would be used to make a “down payment” on the $132-million promissory note, said Robert J. Harter Jr., vice president and general counsel of the Los Angeles-based transportation company.

A minimum of $40 million or 80% of the net proceeds of the offering, whichever is higher, will be used to make the first payment. Under the proposed settlement, half of the remaining debt will be due in three years and the rest in four years. The settlement will have no effect on Tiger’s financial results.