Summary
Take-Two Interactive Software, Inc. (TTWO) filed an 8-K on June 3, 2009, reporting the entry into a material definitive agreement related to a public offering of debt securities. On May 28, 2009, the company entered into an underwriting agreement to sell up to $120 million in aggregate principal amount of 4.375% Senior Convertible Notes due 2014, with an additional $18 million option exercised by the underwriters. This offering was registered with the SEC on Form S-3. In conjunction with the note offering, TTWO also entered into convertible note hedge and warrant transactions. The hedge transactions are designed to reduce potential dilution to common stockholders upon conversion of the notes. However, the accompanying warrant transactions sold to the counterparties introduce a cap on the dilutive protection, meaning the hedge may not fully mitigate dilution if the stock price significantly exceeds certain strike prices. Approximately $17.25 million of the net proceeds from the note offering were used to fund these hedge transactions.
Key Highlights
- 1Take-Two Interactive Software, Inc. successfully priced a public offering of $120 million (plus an additional $18 million option exercised) in 4.375% Senior Convertible Notes due 2014.
- 2The company entered into convertible note hedge transactions to mitigate potential dilution from the conversion of these notes.
- 3Concurrently, Take-Two also sold warrants to the hedge counterparties, which limits the full dilutive protection offered by the hedge transactions.
- 4The net proceeds from the note offering were used, in part, to fund the cost of these hedging and warrant transactions.
- 5J.P. Morgan Securities Inc. and Barclays Capital Inc. served as joint book-running managers for the offering.
- 6The offering and the common stock issuable upon conversion of the notes were registered under SEC Form S-3.