01—Abstract
Summary
Summary of the 8-K filed December 3, 2009. Cited figures are marked; the original filing is the authoritative source.
Ciena Corporation (CIEN) announced an amendment to its asset sale agreement with Nortel Networks Corporation and its subsidiaries, concerning the acquisition of substantially all of Nortel's optical networking and carrier Ethernet assets.
The total consideration remains $530.0 milliona in cash and $239.0 million in 6% senior convertible notes due 2017. However, the amendment introduces a modified mechanism for Ciena to replace some or all of these convertible notes with cash prior to closing, contingent on Ciena's common stock price. This change could potentially increase the cash component of the deal if Ciena's stock price is below a certain threshold, as the company may have to pay a premium to replace the notes with cash.
Investors should monitor Ciena's stock performance and any potential capital raising activities, as these could impact the final deal structure and Ciena's cash position. The filing also notes court approval for the North American agreement.
02—Key points
Key Highlights
- Ciena amended its asset purchase agreement with Nortel, signaling continued progress in acquiring Nortel's MEN business assets.
- The total deal consideration remains $530 million cash plus $239 million in 6% senior convertible notes due 2017.
- A key amendment allows Ciena to substitute notes with cash, with the terms depending on Ciena's common stock price (VWAP below $17.00 triggers different conditions).
- If Ciena's stock price is below $17.00 VWAP, Ciena can replace notes with cash at 102% of face value, potentially increasing total cash outlay compared to the original agreement.
- If Ciena's stock price is at or above $17.00 VWAP, the cash replacement cost for notes is the greater of 105% of face value or 95% of fair value.
- Any capital raising transaction prior to closing will necessitate using net proceeds to replace notes with cash under the amended terms.
- The North American agreement has received approval from the U.S. Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice.
03—Questions
Frequently Asked Questions
What is the primary purpose of this 8-K filing?
This 8-K filing announces an amendment to Ciena Corporation's asset sale agreement with Nortel Networks, specifically detailing changes to how Ciena can elect to pay for a portion of the acquisition using cash instead of convertible notes.
How does the amendment affect the total purchase price?
The total purchase price remains the same at $530.0 million in cash and $239.0 million in convertible notes. However, the amendment provides flexibility for Ciena to replace notes with cash, which could increase the total cash paid depending on Ciena's stock price and market conditions.
What are the conditions under which Ciena can replace notes with cash?
Ciena can elect to replace notes with cash if its common stock's volume-weighted average price (VWAP) over the ten trading days prior to election is less than $17.00 per share, in which case it pays 102% of the face amount. If the VWAP is $17.00 or greater, the cash cost is the greater of 105% of the face amount or 95% of the fair value. Any capital raising prior to closing mandates using proceeds to replace notes with cash.
Has the acquisition of Nortel's assets received any approvals?
Yes, the filing states that the North American Agreement has been approved by the United States Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice.
04—Continue