Finisar sets stock price in exchange offers for 2.5% convertibles

By Angela McDaniels

Tacoma, Wash., July 23 - Finisar Corp. said the stock price that it will use to determine the number of shares to be issued in the exchange offers for its convertible notes is $0.57866.

The company is offering to issue shares and cash in exchange for its 2.5% convertible subordinated notes due 2010 and 2.5% convertible senior subordinated notes due 2010 in two modified Dutch auction tender offers

The $0.57866 stock price is the volume-weighted average price of Finisar's stock for the five-trading-day period that ended on July 22.

The company will exchange up to $37.5 million principal amount, or 75%, of the outstanding subordinated convertibles and up to $57.5 million principal amount, or 62.5%, of the outstanding senior subordinated convertibles.

Holders who tender should specify a bid of $870 to $820 per $1,000 principal amount of convertibles. The range was originally $700 to $750 per $1,000 principal amount and was increased by the company on July 16.

For each convertible accepted, Finisar will pay $525 in cash and a number of shares equal to (a) the exchange consideration minus $525 divided by (b) $0.57866.

Holders will also receive accrued interest up to but excluding the settlement date.

The offers began July 9 and will expire at 5 p.m. ET on Aug. 6.

If the amount of convertibles tendered in an offer exceeds the cap, the convertibles will be accepted for exchange on a pro rata basis.

The cash portion of the exchange consideration will be paid using a portion of the approximately $40.6 million in proceeds received from the company's sale of its network tools division to JDS Uniphase Corp. and with available cash and borrowings under its credit facilities.

The company said it is conducting the exchange offers in order to reduce debt. As of July 9, roughly $50 million principal amount of the subordinated convertibles and $92 million principal amount of the senior subordinated convertibles were outstanding.

In connection with the exchange offers, Finisar has agreed to some modifications of its credit facilities with Silicon Valley Bank, including a reduction in the total size of the secured revolving line of credit to $25 million from $45 million. Some covenants were revised to allow the company to use borrowings under the revolver for a portion of the exchange consideration and up to $50 million of cash from all sources for that purpose.

Following the changes, the total size of the facilities is $45 million.

The financial adviser for the exchange offers is Piper Jaffray & Co., and the information agent is MacKenzie Partners, Inc. (800 322-2285).

Finisar is based in Sunnyvale, Calif., and makes fiber optic subsystems.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.