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CDC disputes validity of put options exercised for 3.75% convertibles
By Angela McDaniels
Tacoma, Wash., Nov. 18 - CDC Corp. said holders of $42,225,000 principal amount, or 25.3%, of its 3.75% senior exchangeable convertible notes due 2011 have submitted notices to exercise their put options, but the company disputes the validity of these notices.
The company believes the put option is no longer exercisable following an amendment made to the convertibles.
CDC expects to continue discussing potential resolutions to this dispute with the holders, according to a 6-K filed with the Securities and Exchange Commission by CDC Software Corp.
As previously reported, the notes and the note purchase agreement were amended to change the definition of qualified initial public offering to provide that CDC Software, CDC Games or any of their respective subsidiaries can consummate a qualified IPO and to reduce the amount of proceeds needed to achieve a qualified IPO to $40 million from $100 million.
Under the original terms of the convertibles, if there is an IPO for at least $100 million of either CDC Software or CDC Games, then the notes become exchangeable into that company's common shares at a price linked to the IPO price, with a discount that increases over time.
CDC Software went public with a $57.6 million IPO in August. The IPO price was $12 per American Depositary Share.
CDC Delaware Corp., the holder of $124.78 million principal amount, or 74.7%, of the convertibles, made the amendment on Nov. 11.
Earlier in the year, the company offered a $175,000 cash bonus to chief executive officer Peter Yip if the Nov. 10, 2009 put option could be avoided or eliminated.
CDC is a Hong Kong-based provider of enterprise software, online games and internet and media services.
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