CEVA Group Plc (“CEVA” or the “Company”) announced today that it has commenced a private offer to exchange (the “Exchange Offer”) any and all of the approximately $390.0 million aggregate principal amount of its outstanding 4.00% First Lien Senior Secured Notes due 2018 (the “Existing Notes”) for its New 9.0% First Lien Senior Secured Notes due 2020 (the “New Notes”) and a related consent solicitation (the “Consent Solicitation”).
Interest on the New Notes will accrue at the rate of 9.0% per annum, of which 6.0% per annum will be payable in cash and 3.0% per annum will be payable in kind. The purpose of the Exchange Offer is to extend the maturity of the Existing Notes from 2018 to 2020, thereby providing the Company with additional flexibility to execute its business strategy. The terms of the Exchange Offer are described more fully in a confidential Offering Memorandum and Consent Solicitation Statement (the “Offering Memorandum”), dated as of March 8, 2017.
On March 8, 2017, certain holders of the Existing Notes (the “Significant Holders”), which collectively held, as of such date, approximately $253.2 million (65%) aggregate principal amount of the Existing Notes, entered into a support agreement (the “Support Agreement”) with CEVA. Pursuant to the Support Agreement, the Significant Holders agreed to tender their Existing Notes in the Exchange Offer. The consummation of the Exchange Offer and the obligations of the Significant Holders to tender their Existing Notes in the Exchange Offer are subject to the terms and conditions set forth in the Support Agreement. The closing of the Exchange Offer is conditioned upon, among other things, the valid tender and acceptance by the Company of at least $370.5 million (95%) aggregate principal amount of Existing Notes in the Exchange Offer.
In conjunction with the Exchange Offer, CEVA is also soliciting consents in the Consent Solicitation from eligible holders of at least a majority of the Existing Notes to the adoption of proposed amendments (the “Proposed Amendments”) to the indenture governing the Existing Notes to (i) eliminate substantially all of the restrictive covenants and certain events of default and related provisions contained therein and (ii) release the collateral securing the Existing Notes.
If the Exchange Offer is consummated, for each $1,000 principal amount of Existing Notes validly tendered, and not validly withdrawn, by eligible holders in the Exchange Offer at or prior to 5:00 p.m., New York City time, on March 21, 2017, unless extended or earlier terminated (such time and date, as it may be extended, the “Consent Time”), such holders will receive $1,025 of New Notes. For each $1,000 principal amount of Existing Notes validly tendered, and not validly withdrawn, by eligible holders in the Exchange Offer after the Consent Time and at or prior to 11:59 p.m., New York City time, on April 4, 2017, unless extended or earlier terminated (such time and date, as it may be extended, the “Expiration Time”), such holders will receive $1,000 of New Notes. Tendered Existing Notes may not be withdrawn after the Consent Time. Eligible holders of Existing Notes accepted for exchange will also receive a cash payment equal to the accrued and unpaid interest in respect of such Existing Notes from the applicable most recent interest payment date to, but not including, the closing date of the Exchange Offer.
Neither CEVA nor any other person makes any recommendation as to whether holders should tender their Existing Notes in the Exchange Offer or provide the consent to the Proposed Amendments in the Consent Solicitation, and no one has been authorized to make such a recommendation. Holders of securities should read carefully the Offering Memorandum before making an investment decision to participate in the Exchange Offer. In addition, holders must make their own decisions as to whether to tender their Existing Notes in the Exchange Offer and provide the related consent in the Consent Solicitation, and if they so decide, the principal amount of the Existing Notes to tender.
In addition, on March 8, 2017, CEVA and a certain Significant Holder entered into an agreement pursuant to which such Significant Holder agreed to privately exchange approximately $15.2 million principal amount of CEVA’s outstanding 12.75% senior notes due 2020 for a like principal amount of New Notes concurrently with, and conditioned upon, the Exchange Offer.
The New Notes being offered in the Exchange Offer have not been registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act.
The Exchange Offer is being made, and the New Notes are being offered and issued only (i) in the United States, to holders of Existing Notes who are “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) or institutional “accredited investors” within the meaning of Rule 501 (a)(1), (2), (3) or (7) of Regulation D under the Securities Act and (ii) outside the United States, to holders of Existing Notes who (A) are not “U.S. persons” (as defined in Rule 902 under the Securities Act) and (B) are also “non-U.S. qualified offerees” (as defined in the letter of eligibility), in reliance on Regulation S of the Securities Act. The Exchange Offer is made only by, and pursuant to, the terms set forth in the Offering Memorandum. The Exchange Offer is subject to certain significant conditions. The complete terms and conditions of the Exchange Offer are set forth in the Offering Memorandum and the other documents relating to the Exchange Offer which will be distributed to eligible holders of the Existing Notes.
CEVA has the right to amend, terminate or withdraw the Exchange Offer and Consent Solicitation, at any time and for any reason, including if any of the conditions to the Exchange Offer are not satisfied. For example, CEVA reserves the right to amend the Proposed Amendments being sought in the Consent Solicitation to provide that upon receipt of the consent of holders of not less than 90% of the outstanding principal amount of Existing Notes, the terms of any Existing Notes that are not tendered in the Exchange Offer may be modified materially and adversely without the consent of such non-tendering holders, including, among other things, to extend their scheduled maturity to beyond May 1, 2018.
Documents relating to the Exchange Offer, including the Offering Memorandum, will only be distributed to holders of Existing Notes who complete and return a letter of eligibility confirming that they are within the category of eligible holders for the Exchange Offer. Holders of Existing Notes who desire a copy of the eligibility letter should visit www.dfking.com/ceva or contact D.F. King & Co., Inc., the information and exchange agent for the Exchange Offer, located in New York, at +1 (800) 628-8532 or +1 (212) 269-5550 or ceva@dfking.com.
