Summary
Ciena Corporation (CIEN) has filed an 8-K report detailing a significant financing event: the private offering of $375 million in aggregate principal amount of Convertible Senior Notes due 2015. These notes were sold to qualified institutional buyers, with an initial conversion price of approximately $20.38 per share, potentially leading to the issuance of about 18.4 million shares of Ciena common stock if fully converted. The primary purpose of this offering is to fund a portion of Ciena's pending acquisition of Nortel's Metro Ethernet Networks (MEN) business. Specifically, approximately $243.8 million of the net proceeds will be used to replace existing contractual obligations to issue convertible notes related to the acquisition, and the remaining net proceeds will reduce the cash needed for the $530 million cash component of the acquisition. This strategic move aims to strengthen Ciena's balance sheet and facilitate a key acquisition, positioning the company for future growth in the optical networking sector. The offering was completed in reliance on exemptions from registration under the Securities Act of 1933.
Key Highlights
- 1Ciena Corporation announced a private offering of $375 million in Convertible Senior Notes due 2015.
- 2The notes are offered to qualified institutional buyers under an exemption from registration.
- 3The notes carry a 4% annual interest rate, payable semi-annually, and mature on March 15, 2015.
- 4The initial conversion price is approximately $20.38 per share, with potential for issuance of ~18.4 million common shares.
- 5Proceeds will be used to fund the acquisition of Nortel's Metro Ethernet Networks (MEN) business, including replacing existing convertible note obligations and reducing cash requirements.
- 6Ciena may redeem the notes on or after March 15, 2013, subject to certain stock price performance conditions and a make-whole premium.
- 7Net proceeds, after fees, are estimated to be approximately $364.3 million.