Novell further extends consent solicitation for 0.5% convertibles

By Laura Lutz

Des Moines, Nov. 3 - Novell, Inc. again extended its consent solicitation to amend the indenture governing its $600 million 0.5% convertible senior debentures due 2024, according to a company news release.

The consent solicitation now expires at 5 p.m. ET on Nov. 6. The expiration was pushed back from Nov. 2 and, previously, Oct. 30 and Oct. 26. The consent solicitation began on Oct. 17.

As modified on Oct. 31, the proposed amendments would give Novell until May 31, 2007 to become current in its reporting obligations and a waiver of rights to pursue remediation for events of default arising due to the company's failure to file its financial statements with the Securities and Exchange Commission on time.

Under the originally proposed amendments, the company would have had until March 30.

For each $1,000 principal amount of debentures, consenting holders will receive a one-time consent fee equal to $57.50 multiplied by the product of the principal amount of debentures outstanding on Nov. 2 divided by the principal amount of debentures for which Novell has received consents.

If Novell has not filed its 10-Q report for the quarter ended July 31and all additional required SEC reports by 5:30 p.m. ET on Feb. 15, holders who consent will receive an additional $10.00 consent fee.

Before the consent fee was raised on Oct. 31, consenting noteholders were to receive an initial consent fee equal to $20.00 multiplied by the product of the principal amount of debentures outstanding on Oct. 26 divided by the principal amount of debentures for which Novell received consents.

The company needs consents from holders of a majority in principal amount of the debentures.

Citigroup Corporate and Investment Banking (800 558-3745 or 212 723-6106) is the solicitation agent, and Global Bondholder Services Corp. (866 794-2200 or 212 430-3774) is information agent.

Novell received a notice of default from Wells Fargo Bank, NA, the trustee for the debentures, in September because of the delay in filing its 10-Q for the quarter ended July 31.

The company has 60 days from Sept. 20 to cure the default.

Novell does not believe it has failed to perform its obligations because the indenture requires it to provide copies of all SEC filings to the trustee within 15 days after the filings are actually made, according to a previous news release.

The company said it will comply with this requirement by providing a 10-Q report to the trustee after filing it with the SEC, which it intends to do as soon as possible after the review of its historical stock-based compensation practices by the company's audit committee is concluded.

The company is a Waltham, Mass.-based computer networking firm.

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