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Original Source: FD (FAIR DISCLOSURE) WIRE
. Beth Elkin, i2 Technologies, IR . Michael McGrath, i2 Technologies, President, CEO . Mike Berry, i2 Technologies, CFO . Philip Alling, Bear Stearns, Analyst . Patrick Walravens, JMP Securities, Analyst
. Brad Reback, CIBC, Analyst . Ryan Novacek, Galleon Management, Analyst . Peter Skalla, Monument Capital Management, Analyst . Patrick Boyce, Highland (ph) Capital, Analyst
The Co. reported that the amount of the offering was $75m and the investors have an over-allotment option (formerly called as greenshoe) that is available to them in 60 days for an additional 15% or $11.25m. After transaction fees, the Co. believes it will receive $70m in net proceeds.
A. Key Data From Call 1. Cash and cash equivalents at 3Q05 end = $272m. 2. Debt at 3Q05 end = $295.3m. 3. Estimated amount received after transaction fees = $70m in net proceeds.
S1. Opening Comments (M.M.) 1. Debt Issue: 1. The Co. has been unfolding over the last six months many initiatives that address the debt issue. 2. ITWO had a goal to address the issue of the debt that is due in 2006 before it became current, which is before the end of FY05 and calendar year. 3. The Co. is exited that it has accomplished what it said it set out to accomplish six months ago.
S2. Recent Financing Activities (M.B.) 1. Highlights: 1. As ITWO has stated publically over the past several months it has been working hard to address its capital structure. 2. The Co. continues to focus on closing the cash-to-debt gap and improving its capital structure. 3. ITWO was very clear on all of its communications that it would need to complete a financing event and that any financing would likely have a substantial dilutive effect on its shareholders. 2. Key Terms of Offering: 1. The amount of the offering was $75m and the investors have an over-allotment option (formerly called as greenshoe) that is available to them in 60 days for an additional 15% or $11.25m. 1. The offering was for senior convertible notes that are due 2015, and the notes pay on interest rate a 5% with interest payable semi-annually.
2. The notes are convertible subject to certain conditions in the cash and shares if any of the Co.'s common stock at an initial conversion price of $15.4675 per share of common stock. 1. This conversion price represents a 50% premium over the last reported price of common stock on 11/21/05. 3. The convertible notes are commonly referred to as net share settled notes where the principal amount of the notes have to be satisfied with cash with any remaining amount satisfied in common stock. 4. In addition, the Co. issued approx. 485,000 warrants that are exercisable at the same conversion price of $15.4675. 5. The terminal warrant is ten years and they were distributed on a pro rata basis to the investors. 6. The Co. is required to file a registration statement with the SEC within 120 days to register the common stock that is issuable upon conversion of the notes and exercise of the warrants. 2. ITWO issued on 11/29/05 its 8-K on the closing of the financing transaction that goes into much greater detail on the offering. 1. The specific agreements were attached as exhibits to the 8-K filing.
3. Effect of Re-Financing Activities: 1. At 3Q05 year-end, the Co. had cash and equivalents of $272m and debt of $295.3m.
2. The cash of $28.9m was used to repurchase $28.5m of debt on
the open market that occurred in Sept. 2005, but was settled
in Oct. 1. Thus these amounts were not included in the final statements for 3Q05. 3. The cash includes accrued interest on these purchases that were paid when the bonds were purchased.
4. After revised amounts, show the cash and debt impact of the
new 5% convertible. 5. After transaction fees, it is estimated that the Co. will receive $70m in net proceeds. 6. ITWO expects to allocate a small portion of the debt amount to equity to account some value of the warrants, but these amounts are not yet finalized and have shown the whole $75m as debt for this exercise. 7. On 11/28/05 the Co. announced that it was calling for redemption $235m of the $260m outstanding balance of its 5.25% convertible notes. 1. The additional $1.8m in cash …