Meritor Inc. (MTOR), a maker of axles and brakes for trucks and buses, fell the most in seven weeks after the company proposed a $150 million convertible debt offering, raising investor concerns that the shares would be diluted.
Meritor dropped 7.6 percent to $3.89 at 11:51 a.m. in New York after reaching $3.83, for the biggest intraday decline since Oct. 10. The shares had dropped 21 percent this year through yesterday.
Meritor said in a statement today it plans to offer notes due 2026 convertible into stock and may grant purchasers $22.5 million more of debt. The Troy, Michigan-based company had 96.5 million shares outstanding as of Nov. 7.
Convertible debt under certain conditions can be converted by the holder into the company’s stock, increasing the number of shares outstanding.
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