Credence Systems may have to hold change-of-control tender offer for 3.5% convertibles

By Angela McDaniels

Tacoma, Wash., Aug. 26 - Some holders of Credence Systems Corp.'s $122.5 million outstanding 3.5% convertible senior subordinated notes due 2010 believe the company is required to hold a change-of-control tender offer for the convertibles following its planned merger with LTX Corp.

The company received notice of the assertion in a letter from the holders' representative on Monday, according to an 8-K report filed by LTX with the Securities and Exchange Commission. Credence Systems and LTX said they are reviewing the letter and considering their response.

If the merger does constitute a change of control, Credence Systems would have to offer to buy back the convertibles at par plus accrued interest. This would likely be financed from the combined company's cash and cash equivalents or with other debt, the filing stated.

Credence Systems said it had $33.5 million of cash and cash equivalents net of debt on May 3, and LTX had $53.6 million of cash, cash equivalents and marketable securities net of debt and a $30 million undrawn revolving credit facility as of July 31.

Credence Systems believes that even if the merger constitutes a change of control and it is required to hold a tender offer, the repurchase would not materially affect the financial condition of the combined company.

The companies provide automated test equipment for the consumer semiconductor industry. Credence Systems is based in Milpitas, Calif., and LTX is located in Norwood, Mass.

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