Sybase (SY) Noteholders Able to Convert Pursuant to Fundamental Change and Non-Stock Fundamental Change
Sybase, Inc. (NYSE: SY) today announced that, in connection with the closing of the acquisition of Sybase by Sheffield Acquisition Corp., a wholly owned subsidiary of SAP America, Inc., pursuant to a “first-step” cash tender offer for all outstanding Sybase common shares at $65.00 per share, and the anticipated closing of the “second-step” cash merger of Sheffield Acquisition Corp. with and into Sybase at the same price per share, with Sybase being the surviving entity, Sybase is delivering notice to the holders of its 3.50% Convertible Senior Notes Due 2029 that they may elect to convert their notes in whole or in part (in principal amount of $1,000 and integral multiples thereof) pursuant to the Fundamental Change and Non-Stock Fundamental Change (in each case, as defined in the indenture under which the notes were issued) that occurred with regard to the transactions.
Noteholders may elect to convert their notes in connection with the Non-Stock Fundamental Change at any time from July 26, 2010 up to the close of business on August 17, 2010 (the “Make-Whole Convertibility Period”) at an increased conversion rate of 22.9939 shares per $1,000 principal amount of notes. The indenture provides that this payment upon conversion shall be payable by Sybase in cash in an amount equal to the conversion rate multiplied by the merger consideration per share.
In order to receive the increased conversion rate as set forth above, noteholders must surrender their notes for conversion during the Make-Whole Convertibility Period. If a noteholder fails to convert its notes during the Make-Whole Convertibility Period, Sybase anticipates that the noteholder will be entitled to convert its notes up until the business day immediately preceding the maturity date of the notes in accordance with the terms of the indenture. However, such noteholder will not be entitled to any increase in the conversion rate due to the Non-Stock Fundamental Change subject of this notice, and the notes will be convertible at a rate of 20.8836 shares per $1,000 principal amount of notes.
Sybase has also announced that, as a result of the Fundamental Change described above and as an alternative to the conversion option described above, noteholders have the right to require Sybase to repurchase all of their notes (or portions thereof that are integral multiples of $1,000 in principal amount) on August 18, 2010 at a repurchase price payable in cash equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, August 18, 2010.
Noteholders should read carefully the notice they will be receiving regarding their conversion rights and their rights to require Sybase to repurchase their notes in connection with the Fundamental Change and Non-Stock Fundamental Change, as it contains important information as to the procedures and timing for the exercise of such rights, as well as information regarding the interest payable by Sybase on the notes.
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