CNET seeks consents to waive events of default for 0.75% convertibles

By Laura Lutz

Des Moines, Sept. 13 - CNET Networks, Inc. began a consent solicitation from holders of its $125 million outstanding 0.75% senior convertible notes due 2024 on Wednesday.

CNET is soliciting consents to amend the indenture of the notes to waive reporting requirements related to the company's failure to file on time its 10-Q report for the quarter ended June 30 and the possible delisting of its stock.

The company needs consents from holders of 70% of the notes.

If it receives the required consents, CNET will pay an additional 7% special interest on the notes for one year.

The consent solicitation will expire at midnight ET on Oct. 11.

CNET previously announced that it had not filed its 10-Q report for the quarter ended June 30 on time in order to address certain accounting matters.

The company also announced that it anticipates restating the financial statements for 2003, 2004 and 2005 included in its 10-K report filed with the SEC on March 16 and its balance sheet as of March 31, and it may have to restate financial statements for additional periods.

Under the proposed amendments, all requirements for the company to report to the trustee or noteholders and any related events of default would be waived.

In addition, consenting noteholders will waive the right to tender their notes in any tender offer that CNET is required to conduct if its stock is delisted.

The waivers under the proposed amendments would apply for one year.

On Aug. 14, CNET received a Nasdaq staff determination note asserting that the company had violated Nasdaq rules and its stock was subject to delisting. In response, the company has requested a hearing before the Nasdaq Listing Qualifications Panel.

Pending a decision by the panel, CNET's stock will remain listed on the Nasdaq National Market.

D.F. King & Co., Inc. (800 829-6551 or collect 212 269-5550) is the information agent. The solicitation agent is of Banc of America Securities LLC, convertibles sales department (800 654-1666 or collect 212 583-8206).

In separate news, CNET entered into a new $60 million, one-year credit agreement with Bank of America, NA, which replaces the company's existing credit facility.

The borrowings may be drawn down as revolving loans or as term loans. The company intends to satisfy the conditions for the initial drawdown by Sept. 15. The borrowings are collateralized by security interests in most of the company's assets.

CNET is an internet media company based in San Francisco.

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