Brocade Announces Pricing Of $500 Mln Convertible Senior Notes Offering Due 2020

(RTTNews) - Brocade (BRCD) announced the pricing of $500 million principal amount of 1.375% Convertible Senior Notes due 2020 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

Brocade said it has also granted the initial purchasers for the offering an option to purchase up to an additional $75 million principal amount of Notes from Brocade solely to cover over-allotments, if any. The sale of the Notes is expected to close on January 14, 2015, subject to customary closing conditions.

Brocade estimates that the proceeds from this offering will be about $490.4 million or $564.1 million if the initial purchasers exercise their over-allotment option in full, after deducting fees and estimated expenses.

The company said it expects to use approximately $30.4 million of the net proceeds of the offering to pay the cost of the convertible note hedge transactions. In addition, Brocade expects to use about $48.9 million of the net proceeds from the offering to repurchase shares of Brocade's common stock concurrently with the pricing of the offering in privately negotiated transactions effected through one of the initial purchasers or its affiliate as Brocade's agent.

Brocade intends to use the remainder of the net proceeds to redeem all of Brocade's outstanding 6.875% senior secured notes due 2020 and for general corporate purposes, including potential acquisitions and other business development activities.