Finisar gets tenders for $47.5 million total of 2.5% convertibles in exchange offers

By Jennifer Chiou

New York, Aug. 7 - Finisar Corp. said it completed its offer 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 offers began on July 9 and expired at 5 p.m. ET on Aug. 6.

The company said it expects to accept the tendered notes, comprising $33.1 million, or 66.2%, of its $50 million of the subordinated notes and $14,404,000, or 15.7%, of the $92 million of senior subordinated notes.

The stock price that it used to determine the number of shares to be issued in the exchange offers for its convertible notes was $0.57866, which was the volume-weighted average price of Finisar's stock for the five-trading-day period that ended on July 22.

The company previously said it would 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. Based on the tenders, the company said it does not expect any proration.

Holders who tendered could 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, or 596 shares.

Holders will also receive accrued interest up to but excluding the settlement date, Aug. 12.

The cash portion of the exchange consideration will be paid using a portion of the $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 already said it was 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 previously 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.

"I am pleased we completed the exchange offers with a significant portion of the outstanding notes tendered and am also encouraged by the confidence that continuing holders of our notes have shown in the prospects of the company moving forward," Jerry S. Rawls, chairman of the board of the company, said in a news release.

"Reducing our indebtedness under the notes by $47.5 million will provide us with greater financial flexibility."

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

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

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