01—Abstract
Summary
Summary of the 8-K filed December 19, 2012. Cited figures are marked; the original filing is the authoritative source.
Ciena Corporation (CIEN) announced on December 19, 2012, that it has entered into private exchange agreements to retire $187.5 milliona in aggregate principal amount of its 4.0% Convertible Senior Notes due 2015.
In their place, Ciena will issue a new series of 4.0% Convertible Senior Notes due 2020, also with an aggregate principal amount of $187.5 millionb. This transaction is designed to extend Ciena's debt maturity profile, moving a portion of its convertible debt obligations out by five years. The exchange, expected to close on December 27, 2012, will result in $187.5 million of the 2015 Notes remaining outstanding, alongside the newly issued $187.5 million of 2020 Notes.
The 2020 Notes will feature a slightly different structure, including a 1.85% annual principal accretion rate, and will be convertible into Ciena common stock at an initial conversion price of $20.385c per share. The company has reserved approximately 9.2 million shares for potential conversion.
02—Key points
Key Highlights
- Ciena Corp. has exchanged $187.5 million of its 4.0% Convertible Senior Notes due 2015 for an equal principal amount of new 4.0% Convertible Senior Notes due 2020.
- The transaction effectively extends the maturity of a portion of Ciena's convertible debt by five years, from 2015 to 2020.
- The exchange was conducted through private negotiations with certain holders of the 2015 Notes and is expected to close on December 27, 2012.
- The new 2020 Notes will have an initial conversion price of $20.385 per share, with approximately 9.2 million shares reserved for issuance upon conversion.
- The 2020 Notes will include a principal accretion rate of 1.85% per year, compounding semi-annually, with the accreted portion not bearing interest or being convertible.
- The transaction was structured as an unregistered offering, relying on exemptions under the Securities Act of 1933 for accredited investors.
- Following the exchange, $187.5 million of the 2015 Notes will remain outstanding, and $187.5 million of the 2020 Notes will be outstanding.
03—Questions
Frequently Asked Questions
What is the primary purpose of this exchange transaction for Ciena?
The primary purpose is to extend the maturity of a portion of Ciena's convertible debt from 2015 to 2020, providing the company with more time to manage its financial obligations and potentially improve its debt maturity profile.
How does the new 2020 Convertible Senior Notes differ from the original 2015 Notes?
While both carry a 4.0% interest rate, the 2020 Notes have a maturity date of December 15, 2020, compared to the 2015 Notes' maturity in 2015. Additionally, the 2020 Notes feature a principal accretion rate of 1.85% per year, meaning their face value increases over time, though the accreted portion is not convertible or interest-bearing. The conversion price is also specified at $20.385 per share.
How many shares of Ciena common stock could be issued as a result of this transaction?
The company has reserved an aggregate of 9,197,944 shares of its common stock for issuance upon the conversion of the 2020 Notes. This is based on an initial conversion rate of 49.0557 shares per $1,000 principal amount of notes.
Were these new notes offered to the public?
No, the 2020 Notes were offered and sold privately to certain holders of the 2015 Notes in reliance on exemptions from registration under the Securities Act of 1933, specifically Section 4(a)(2). This means they were not part of a public offering and were solicited only from persons believed to be 'accredited investors'.
04—Continue