New York, Dec. 22 - Silicon Graphics Inc. said it completed its exchange offer for its 5¼% senior convertible notes due 2004 with $226.7 million principal amount tendered and accepted.
The response rate represents 98% of the $230 million outstanding.
The Mountain View, Calif., company said $224 million of the old convertibles were exchanged for new 6½% senior secured convertible notes and $2.3 million for new 11¾% senior secured notes.
"The successful completion of the exchange offer is an important milestone and represents a great vote of confidence in the future of SGI," said Bob Bishop, chairman and chief executive officer of Silicon Graphics. "The restructuring of this obligation will give us the time to continue our progress toward profitability and should substantially remove an uncertainty that has clouded our future."
Silicon Graphics began the exchange on Nov. 21, offering either new 11¾% senior secured notes due June 2009 or new 6½% senior secured convertible notes due 2009. The convertibles will have a conversion price of $1.25 per share.
In either case, Silicon Graphics will exchange its existing convertibles for the same principal amount of new securities.
The company said that the exchange is intended to offer holders of the existing notes an increase in yield, the benefits of a security interest and, in the case of the new convertibles, a lower conversion price in return for a "significant" extension in the maturity of the notes.
The company on Aug. 4 pulled its previous exchange offer after failing to achieve sufficient participation despite revising the terms. Holders of 71% of the existing convertibles tendered their securities, less than the 85% threshold set to complete the exchange.
The revised terms of the earlier offer were similar to the new offer, except that the new instruments were senior rather than senior secured and the conversion price for the convertibles was higher in the earlier offer. In addition, the earlier exchange limited the number of convertibles that could have been issued.
Terms of the new securities are:
Senior secured convertible notes
| Issuer: | Silicon Graphics Inc.
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| Issue: | Senior secured convertible notes
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| Amount: | $224 million
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| Maturity: | June 1, 2009
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| Coupon: | 6½%
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| Conversion price: | $1.25
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| Call: | After three years at par subject to 150% hurdle, after four years at par with no hurdle
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| Listing: | New York Stock Exchange
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| Senior secured notes
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| Issuer: | Silicon Graphics Inc.
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| Issue: | Senior secured notes
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| Amount: | $2.3 million
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| Maturity: | June 1, 2009
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| Coupon: | 11¾%
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| Call: | From June 1, 2004 at 104, then 103, 102, 101, declining to par on June 1, 2008.
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| Listing: | New York Stock Exchange
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