SEC Filing Summary: SYNNEX CORPORATION (Form 8-K)
Business Context and Reporting Period
This Current Report on Form 8-K was filed by SYNNEX Corporation on May 12, 2008. The filing discloses the entry into a material definitive agreement and the creation of a direct financial obligation through the issuance of convertible debt securities.
Key Financial Metrics and Transaction Details
- Debt Issuance: $125.0 million aggregate principal amount of 4.0% Convertible Senior Notes due 2018.
- Net Proceeds: Approximately $120.6 million after deducting the Initial Purchasers' discount of approximately $3.1 million and estimated offering expenses.
- Interest Rate: 4.0% per annum, payable semiannually in cash.
- Contingent Interest: Potential additional interest of 0.55% of the average trading price per six-month period if the Notes trade at 120% or more of principal (applicable starting May 15, 2013).
- Conversion Terms: Initial conversion rate of 33.9945 shares per $1,000 principal amount (approx. $29.42 conversion price). Settlement may be in cash, stock, or a combination at the Company's election.
- Maturity Date: May 15, 2018.
- Use of Proceeds: General corporate purposes and reduction of outstanding balances under certain credit arrangements.
Material Changes and Obligations
The Company has incurred a new long-term debt obligation of $125.0 million. The Notes rank equally with existing unsecured senior debt and are structurally subordinated to subsidiary liabilities. The filing notes that the aggregate principal amount does not reflect the exercise of a 13-day option granted to Initial Purchasers to buy up to an additional $18.75 million in Notes.
Outlook, Risks, and Contingencies
- Redemption and Repurchase: The Company may not redeem the Notes prior to May 20, 2013. Holders may require the Company to repurchase the Notes on May 15, 2013, or upon a fundamental change, at 100% of principal plus accrued interest.
- Default Penalties: If the Company fails to file required SEC reports timely, the Notes will accrue additional interest at 0.25% per year for the first 180 days of violation. A one-time payment of 0.25% is also triggered if the Company fails to file reports or if the Notes are not freely tradable within the first year.
- Events of Default: Include failure to pay interest or principal, failure to convert upon exercise, bankruptcy, and certain judgments exceeding $20.0 million.
- Liquidity Restrictions: The Notes and underlying stock are subject to transfer restrictions and have not been registered under the Securities Act of 1933.
Investor Verification Checklist
- Verify the Company's current credit facility balances to assess the impact of the stated intent to reduce debt.
- Monitor the Company's stock price relative to the $29.42 conversion price to evaluate conversion risk.
- Confirm whether the Initial Purchasers exercised the option to purchase the additional $18.75 million in Notes.
- Review the full Indenture (Exhibit 4.1) for specific covenants and detailed default provisions.
- Check subsequent filings to ensure no late SEC reports were filed that would trigger the 0.25% additional interest penalty.