Zarlink to buy back up to 10% of its C$70.76 million 6% convertibles

By Susanna Moon

Chicago, Oct. 30 - Zarlink Semiconductor Inc. said the Toronto Stock Exchange approved a notice of intention to make a normal course issuer bid permitting it to repurchase for cancellation up to C$7,076,400, or 10%, of its 6% convertible unsecured subordinated debentures.

The public float of C$70,764,000 in the 6% convertibles is as of Wednesday.

Zarlink said it plans to repurchase the convertibles using available cash during a 12-month period from Nov. 3 to Nov. 2, 2010.

The company noted that the average daily trading volume of Zarlink's convertibles over the last six complete calendar months was C$325,992 principal amount. Under the exchange rules, Zarlink may purchase up to 25% of that amount, or $81,498, per trading day. As of Wednesday, there was C$70,864,000 of the convertible debentures outstanding.

The company said its managers believe that at times the market price of the convertible debentures may not fully reflect the underlying value of the notes and that it is in the best interests of Zarlink to purchase them.

Zarlink began a normal course issuer bid for the debentures on Oct. 27, 2008, and by Nov. 17, 2008, had repurchased, at a weighted average price of $40 per $100 principal amount, $7,865,000 principal amount of debentures - the maximum amount that could be repurchased under the bid.

American Appraisal Canada Inc. prepared a valuation report for Zarlink's formal issuer bid launched on June 8, under which it purchased $21,000 principal amount of the convertibles. The fair market value of the convertible debentures, as of May 18, is said to fall within the range of $51.10 to $58.60 per $100 principal amount.

Zarlink is an Ottawa company that designs, manufactures and distributes semiconductors in Europe, Asia Pacific, the United States and Canada.

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