Qihoo: Going private triggers put option for three convertible series

By Susanna Moon

Chicago, Dec. 18 – Qihoo 360 Technology Co. Ltd. holders may be able to exercise put options for three series of convertible notes if there is a fundamental change under those note terms, according to a 6-K filing with the Securities and Exchange Commission.

The convertibles due 2018, 2020 and 2021 will be putable at par plus accrued interest to the repurchase date if the company goes private, as planned.

Qihoo 360 entered into a definitive merger agreement to be acquired by a consortium of investors for $9.3 billion in cash, including the redemption of about $1.6 billion of debt, according to a company press release.

The merger price is a 16.6% premium to the closing price of the company's American Depositary Shares on June 16, the trading day before the company announced plans to go private, and a 32.7% premium to the average closing price of the company’s ADSs during the 30 trading days before receiving the proposal, the release noted.

The consortium plans to fund the merger through cash contributions from investors under equity commitment letters and proceeds from a committed term loan facility of up to the yen equivalent of $30 billion and a bridge loan facility of up to $400 million under debt commitment letters provided by China Merchants Bank Co., Ltd.

The merger is expected to close during the first half of 2016, subject to shareholder approval.

Beijing-based Qihoo provides PC and mobile internet security products in China.

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