CNET Networks fails to receive needed consents for 0.75% convertibles

By Laura Lutz

Des Moines, Oct. 19 - CNET Networks, Inc. did not receive the consents it needed to amend its $125 million of outstanding 0.75% senior convertible notes, according to a company release.

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

Because it did not meet that threshold, CNET will not accept any of the consents that were submitted, and the note indenture will not be amended.

The offer expired at midnight ET on Oct. 18, having earlier been extended from Oct. 11.

The company had been offering to extend the call protection period for the notes to April 20, 2011 from April 20, 2009 for holders who consented and offered to pay an additional 7% special interest on the notes for one year if it receives the required consents.

CNET began soliciting consents on Sept. 13 to amend the indenture governing the notes to waive reporting requirements related to the company's failure to file its 10-Q report for the quarter ended June 30 on time and the possible delisting of its stock.

Since announcing the failure to file its 10-Q for the second quarter, CNET said it will also be unable to file its 10-Q for the quarter ended Sept. 30 on time and attributed the delay to its independent investigation of stock option granting practices.

Previously, the company announced that it anticipates restating the financial statements for 2003, 2004 and 2005 included in its 10-K filed with the Securities and Exchange on March 16 and its balance sheet as of March 31, and it may need 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 have been waived.

In addition, consenting noteholders would have waived 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 have applied 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 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) was the information agent for the consent solicitation. The solicitation agent was Banc of America Securities LLC, convertibles sales department (800 654-1666 or collect 212 583-8206).

CNET is an internet media company based in San Francisco.

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