Summary
Ciena Corporation (CIEN) filed an 8-K on August 2, 2017, detailing the completion of an exchange offer for its outstanding 3.75% Convertible Senior Notes due 2018. The company exchanged a portion of its older notes ('Old Notes') for newly issued 'New Notes' with identical interest rates and maturity dates. Following the settlement, $61,270,000 principal amount of Old Notes and $288,730,000 principal amount of New Notes remain outstanding. This exchange offer was conducted under a Registration Statement filed with the SEC.
Key Highlights
- 1Ciena completed an exchange offer for its 3.75% Convertible Senior Notes due 2018.
- 2New notes with the same terms (3.75% interest, 2018 maturity) were issued.
- 3The exchange resulted in $61.27 million of old notes and $288.73 million of new notes outstanding.
- 4The company has the option to settle note conversions in cash, stock, or a combination.
- 5Ciena intends to use the treasury stock method for diluted EPS calculations for these notes.
- 6This accounting treatment excludes shares from diluted EPS unless the conversion value exceeds the principal amount.
Frequently Asked Questions
The 8-K filing was primarily to announce the entry into a material definitive agreement, specifically the Indenture for the new series of 3.75% Convertible Senior Notes due 2018, which were issued in connection with the company's completed exchange offer for its old notes.
The exchange offer allowed holders of the old notes to swap them for new notes with identical terms. This effectively refreshed the notes with new issuance documentation and potentially addresses any compliance or structural concerns with the old notes, while maintaining the same financial obligations for Ciena.
Ciena intends to settle the principal amount of the new notes in cash upon conversion. Due to this intent, the company plans to account for the potential issuance of shares using the treasury stock method. This generally means that shares issuable upon conversion will not be included in diluted EPS calculations unless the market value of the shares exceeds the principal amount of the notes.
Following the settlement of the exchange offer, there are $61,270,000 in aggregate principal amount at maturity of the old notes and $288,730,000 in aggregate principal amount at maturity of the new notes outstanding.