8-KOther EventsExhibits & Filings

CIENA CORP 8-K Report, Corporate Update (Sep 20, 2018)

Filed September 20, 2018For Securities:CIEN

Summary

Ciena Corporation (CIEN) has announced its intent to exercise its option to convert its outstanding 4.0% Convertible Senior Notes due 2020, with a principal amount of $187.5 million, into shares of Ciena common stock. This conversion is scheduled to take effect on October 31, 2018. The company anticipates issuing approximately 9.2 million shares of common stock as a result of this conversion, at which point the notes will no longer be outstanding. In connection with this conversion, Ciena has elected to settle the "make-whole" provision, which typically entitles noteholders to additional shares, by paying cash instead of issuing more stock. The exact cash amount will be determined prior to the conversion date. This action will impact the company's outstanding share count and potentially its financial leverage as the convertible debt is extinguished.

Key Highlights

  • 1Ciena Corp. is exercising its option to convert $187.5 million of its 4.0% Convertible Senior Notes due 2020 into common stock.
  • 2The conversion is set to occur on October 31, 2018.
  • 3Approximately 9.2 million shares of Ciena common stock are expected to be issued upon conversion.
  • 4The 2020 Convertible Senior Notes will cease to be outstanding after the conversion.
  • 5Ciena will pay cash in lieu of issuing additional shares related to the 'make-whole' provision in the note indenture.
  • 6The cash amount for the make-whole provision will be determined before the conversion date.
  • 7This event signals a change in Ciena's capital structure, moving from convertible debt to equity.

Frequently Asked Questions

Ciena is choosing to convert its outstanding convertible debt into equity. This means the $187.5 million principal amount of 4.0% Convertible Senior Notes due 2020 will be settled by issuing new shares of Ciena common stock, effectively reducing the company's debt and increasing its outstanding share count.

The 'make-whole' provision in the indenture typically compensates noteholders with additional shares if the conversion happens under certain conditions. Ciena has elected to pay cash instead of issuing these additional shares, which avoids further dilution but will result in a cash outflow for the company.

Ciena expects to issue approximately 9.2 million shares of its common stock upon conversion. This will increase the total number of outstanding shares, which could affect earnings per share (EPS) calculations if not accompanied by a proportional increase in net income.

The conversion is scheduled for October 31, 2018. After this date, the 4.0% Convertible Senior Notes due 2020 will no longer be outstanding, as they will have been converted into equity.