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 21, 2008. The filing reports the exercise of an option to sell additional convertible debt securities in a private placement. The company is incorporated in Delaware and maintains its principal executive offices in Fremont, California.
Key Financial Metrics and Transaction Details
- Debt Issuance: Sold an additional $18.75 million aggregate principal amount of 4.0% Convertible Senior Notes due 2018 (the "Option Notes").
- Total Offering: Combined with the initial $125.0 million sold on May 12, 2008, the total principal amount of the Notes is $143.75 million.
- Net Proceeds: Approximately $18.28 million from the Option Notes after deducting an aggregate discount of approximately $0.47 million.
- Interest Rate: 4.0% per annum, payable semiannually in cash beginning November 15, 2008.
- Contingent Interest: Additional interest of 0.55% of the average trading price may be payable if the Notes trade at 120% or more of principal for ten consecutive trading days prior to an interest period (starting May 15, 2013).
- Conversion Terms: Initial conversion rate is 33.9945 shares per $1,000 principal amount (approx. $29.42 per share). Conversion may result in cash, stock, or a combination at the Company's election.
- Maturity: May 15, 2018.
- Use of Proceeds: General corporate purposes and reduction of outstanding balances under certain credit arrangements.
Material Changes and Debt Structure
The filing represents a material increase in the Company's debt obligations through the full exercise of the option granted to Initial Purchasers (Banc of America Securities LLC, UBS Securities LLC, and Raymond James & Associates, Inc.). The Notes rank equally with all existing and future unsecured senior debt and are senior to any subordinated debt. They are effectively junior to secured indebtedness and structurally subordinated to subsidiary liabilities. The Indenture does not limit the amount of additional debt the Company may incur.
Guidance, 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 Provisions: Events of default include failure to pay interest or principal, failure to convert upon exercise, bankruptcy, and failure to file required SEC reports. A failure to file reports within 15 days triggers additional interest of 0.25% per year for the first 180 days of the violation.
- Registration Status: The Notes and underlying stock are unregistered and subject to transfer restrictions. Holders may only resell pursuant to exemptions (e.g., Rule 144A). The Company does not intend to file a shelf registration for resale.
- Additional Interest Penalty: A one-time payment of 0.25% is required if the Company fails to timely file required SEC documents within six months to one year of issuance or if the Notes are not freely tradable.
Key Facts for Investor Verification
- Verify the total outstanding principal of the 4.0% Convertible Senior Notes due 2018 is now $143.75 million.
- Confirm the impact of the $18.28 million net proceeds on the Company's current liquidity and credit facility balances.
- Monitor the Company's stock price relative to the $29.42 conversion price to assess potential dilution or cash settlement obligations.
- Review the Company's compliance with SEC filing deadlines to avoid triggering the 0.25% additional interest penalty.
- Assess the Company's ability to meet the 4.0% semiannual interest payments starting November 15, 2008.