Magma: Uncertain success of planned convertibles exchange offer casts doubt on going-concern status

By Angela McDaniels

Tacoma, Wash., July 20 - Magma Design Automation, Inc. said that unless 70% or more of holders participate in the upcoming exchange offer for its 2% convertible senior notes due May 15, 2010, it may not have enough cash to repay the convertibles at maturity.

The uncertainty about the ultimate participation in the exchange offer raises "substantial doubt" about Magma's ability to continue as a going concern, according to its 10-K report for the fiscal year ended May 3 filed with the Securities and Exchange Commission.

Magma plans to begin the exchange offer shortly. A schedule TO for the offer was filed with the SEC on May 22. It was amended on June 23 and is being reviewed.

As previously reported, the company plans to offer up to $44,945,000 of 8% convertible senior notes due 2014 in exchange for the 2% convertibles, of which $49,939,000 principal amount is outstanding.

The company is a Santa Clara, Calif., maker of semiconductor design software.

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