-- 2.50% Convertible Subordinated Notes due 2010 (the "Subordinated
Notes"); and
-- 2.50% Convertible Senior Subordinated Notes due 2010 (the "Senior
Subordinated Notes").
The Company is conducting the Exchange Offers in order to reduce the
aggregate principal amount of its outstanding indebtedness. As of July 9,
2009, approximately $50 million aggregate principal amount of the
Subordinated Notes and approximately $92 million aggregate principal amount
of the Senior Subordinated Notes were outstanding.
Finisar also announced that, in connection with the Exchange Offers, it has
agreed to certain modifications of its existing credit facilities with
Silicon Valley Bank (the "SVB Agreements") including a reduction in the
total amount of borrowings available under the facilities and conditions
under which such borrowings may be used to fund a portion of the
consideration for the Exchange Offers.
The Exchange Offer
The Company will exchange up to an aggregate of $37.5 million principal
amount, or 75%, of the outstanding Subordinated Notes. The Company will
also exchange up to an aggregate of $57.5 million principal amount, or
62.5%, of the outstanding Senior Subordinated Notes.
For each $1,000 principal amount of Notes, tendering holders will receive
consideration with a value not greater than $750 nor less than $700 (the
"Exchange Consideration"), with such value determined by a "Modified Dutch
Auction" procedure, plus accrued and unpaid interest to, but excluding, the
settlement date, payable in cash. A separate "Modified Dutch Auction"
procedure will be conducted for each of the Exchange Offers. A "Modified
Dutch Auction" tender offer allows holders of the Notes to indicate the
principal amount of Notes that such holders desire to tender and the
consideration within the specified range at which they wish to tender such
Notes for each Exchange Offer. The mix of Exchange Consideration will
consist of (i) $525 in cash, and (ii) a number of shares of common stock
with a value equal to the Exchange Consideration minus $525 (the "Equity
Consideration"). The number of shares of common stock representing the
Equity Consideration to be received by holders as part of the Exchange
Consideration will be determined on the basis of the trading price of the
common stock during a 8-trading day VWAP period (the "8-day VWAP") starting
on July 13 and ending on July 22, 2009, as further described in a Schedule
TO (including the Offer to Exchange and related Letter of Transmittal
attached as exhibits thereto) to be filed by Finisar with the Securities
and Exchange Commission (the "SEC") today.
The portion of the Exchange Consideration consisting of cash will be paid
using a portion of the approximately $40.6 million in aggregate proceeds to
be received from the Company's recently announced sale of its Network Tools
Division, expected to be consummated on or about July 15, 2009, and with
available cash and borrowings under the SVB Agreements.
The Exchange Offers are scheduled to expire at 5:00 p.m., New York City
time, on Thursday, August 6, 2009, unless they are extended. Tendered
Notes may be withdrawn at any time on or prior to the expiration of the
Exchange Offers.
If the aggregate amount of Notes validly tendered and not properly
withdrawn on or prior to the expiration date at or below the Exchange
Consideration exceeds the amount Finisar is offering to exchange in either
Exchange Offer, Finisar will accept for payment the Notes that are validly
tendered and not properly withdrawn from such Exchange Offer at or below
the Exchange Consideration on a pro rata basis from among the tendered
Notes.
The description of the Exchange Offers in this press release is only a
summary and is qualified in its entirety by all of the terms and conditions
of the Exchange Offers set forth in the Offer to Exchange, the Letter of
Transmittal and related materials filed with the SEC.
The financial advisor for the Exchange Offers is Piper Jaffray & Co., the
information agent for the Exchange Offers is MacKenzie Partners, Inc. and
the depositary for the Exchange Offers is American Stock Transfer & Trust
Company.
Credit Facilities to be Modified
The SVB Agreements provide the Company with credit facilities of up to $65
million, including $45 million under a secured revolving line of credit,
$16 million under an accounts receivable purchase line of credit and $4
million under a credit line for standby letters of credit. However, they
are subject to certain financial covenants and restrictions that limit our
ability to borrow under these facilities and to use such borrowings for the
purpose of a reduction in our outstanding convertible notes.
On July 8, 2009, the Company received a written commitment from Silicon
Valley Bank to modify the SVB Agreements to facilitate the Exchange Offers.
Principal modifications to the SVB Agreements include:
-- A reduction in the total size of the Company's secured revolving line
of credit from $45 million to $25 million; and
-- Revised covenants that permit the use of borrowings under the secured
revolving line of credit for a portion of the Exchange Consideration in
connection with the Exchange Offers and the use of up to an aggregate of
$50 million of cash from all sources for that purpose.
Other than $3.4 million used under the credit line for standby letters of
credit, the Company currently has no borrowings outstanding under these
credit facilities, although it has reduced its cash balance since April 30,
2009 in order to reduce borrowings that were previously outstanding under
its accounts receivable purchase line of credit.
About Finisar
Finisar Corporation (Contact Information: Contact: Steve Workman Chief Financial Officer 408-548-1000 Victoria McDonald Senior Manager, Corporate Communications 408-542-4261 investor.relations@Finisar.com