Lawson Software cancels 2.5% convertibles hedge with Lehman Brothers

By Angela McDaniels

Tacoma, Wash., Oct. 13 - Lawson Software, Inc. said it is terminating the hedge transaction and warrant agreement it entered into with Lehman Brothers OTC Derivatives Inc. when it issued its $240 million 2.5% senior convertible notes in April 2007.

The bankruptcy filings of Lehman Brothers Holdings Inc. and Lehman Brothers OTC were events of default under the hedge and warrant transactions, according to the company's 10-Q report for the quarter ended Aug. 31. The 10-Q was filed with the Securities and Exchange Commission on Friday.

The hedge and warrant transactions were designed to reduce the potential dilution resulting from conversion of the convertibles and effectively increased the conversion price to $15.58 per share from $12.02.

The company noted that the terms of the convertibles and the rights of noteholders are not affected by the status of Lehman Brothers or by the termination of the hedge and warrant transactions.

Lawson Software, a St. Paul, Minn.-based software developer, said it is evaluating the impact that the termination may have on its financial statements in future periods.

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