Audiovox Corporation was a designer and marketer of cellular telephones and accessories, automotive aftermarket sound and security equipment, other automotive aftermarket accessories, and other products.
The Company had issued $65 million convertible subordinated debentures to institutional investors. Approximately six weeks later, the Company announced disappointing earnings, causing its shares to decline 38% from the date of the offering. After discussions with the debenture holders, the Company determined that action should be taken with respect to the debentures.
A principal of Carter Morse & Mathias acted as the exclusive financial advisor to Audiovox and assisted the Company in its negotiations with the debenture holders. In keeping with the Company’s desire to maintain good relations with its investors, and to minimize the tax and dilution effects of an amendment to the debentures, the Company’s chairman and majority shareholder agreed to offer the debenture holders warrants, with the underlying shares to be supplied from his personal stock holdings.