McDATA Completes Convertible Subordinated Notes Offering
Friday February 7, 12:57 pm ET
Secures Favorable Pricing Terms
BROOMFIELD, Colo., Feb. 7 /PRNewswire-FirstCall/ -- McDATA® Corporation (Nasdaq: MCDTA; MCDT), the worldwide leader in open, ultra-high availability storage networking solutions, today announced that it has completed its offering of $172.5 million of Convertible Subordinated Notes due in 2010 to qualified institutional buyers pursuant to Rule 144A. The aggregate $172.5 million of Notes includes the original offer of $150 million plus an exercise by the initial purchasers of their option to purchase an additional $22.5 million of Notes. The Notes will bear interest at a rate of 2.25 percent per year, and will be convertible into the company's Class A common stock at a conversion price of approximately $10.71 per share. The sale of the Notes closed today, February 7, 2003.
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At the initial conversion price, each $1,000 principal amount of Notes will be convertible into approximately 93 shares of the company's Class A common stock. The initial conversion price represents a 42 percent premium over the last reported sale price of the company's Class A common stock on February 3, 2003, which was $7.54 per share.
McDATA intends to use the net proceeds from the sale of the Notes for general corporate purposes, including working capital, capital expenditures and potential acquisitions or investments in complementary businesses or technologies, although McDATA is not currently in discussions with any third parties regarding potential acquisitions. McDATA also will use approximately $20 million of the proceeds to enter into share option transactions on its Class A common stock to mitigate against potential dilution from conversion of the Notes.
In connection with the share option transactions, certain of the initial purchasers and/or their affiliates have taken, and from time to time are expected to modify, positions in McDATA's Class A and/or Class B common stock in secondary market transactions and/or enter into various derivative transactions.
The securities offered have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful. |
