Novell receives consents to amend 0.5% convertibles

By Laura Lutz

Des Moines, Nov. 10 - Novell, Inc. accepted consents from holders of a majority of its $600 million outstanding principal amount of 0.5% convertible senior debentures due 2024.

The solicitation expired at 5 p.m. ET on Nov. 9.

The deadline, originally set for Oct. 26, was earlier pushed back to Oct. 30, Nov. 2 and Nov. 6. The consent solicitation began on Oct. 17.

As announced on Nov. 7, the company will pay an additional 7.33% of interest on the debentures for the year that began on Nov. 9. This special interest replaces the consent fee that was previously offered.

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.

The company needed consents from holders of a majority in principal amount of the debentures in order to effect the amendments.

Before the consent fee was eliminated, for each $1,000 principal amount of debentures, consenting holders were to 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 received consents.

If Novell had 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 consented were to 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.

Citigroup Corporate and Investment Banking (800 558-3745 or 212 723-6106) is the solicitation agent, and Following the Nov. 7 modification, any consents submitted before the change had no effect. Holders who wish to consent were required to deliver new consents after the change.

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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