CNET Networks, Inc. Begins Solicitation of Consents From Holders of 0.75% Senior Convertible Notes Due 2024 and Enters Into a $6
September 13 2006 - 4:05PM
Business Wire
CNET Networks, Inc. (NASDAQ:CNET) announced today that it has
commenced a solicitation of consents from holders of record as of
September 12, 2006 of its outstanding $125.0 million principal
amount of 0.75% Senior Convertible Notes due 2024 for the amendment
and waiver of certain reporting requirements in the indenture for
the notes. The amendments and waivers pertain to (i) the company's
previously announced failure to timely file its Quarterly Report on
Form 10-Q for the quarter ended June 30, 2006 and certain future
filing obligations and (ii) possible delisting of the company's
stock that may result from the company's hearing with Nasdaq as
described below. The proposed amendments and waivers to the
indenture would suspend CNET Networks' obligations under the
indenture to transmit to the trustee under the indenture or the
holders of the notes any reports or information CNET Networks is
required to file with the Securities and Exchange Commission on or
prior to the first anniversary of the closing of the consent
solicitation. In addition, the consent solicitation would provide
for a waiver of all related defaults under the indenture's
reporting requirements and, solely with respect to consenting
holders, a waiver of consenting holders' rights to tender notes in
any mandatory offer by CNET Networks to purchase the notes
resulting from the occurrence of any termination of the listing of
the company's common stock on or prior to the first anniversary of
the closing of the consent solicitation. CNET Networks has
requested a hearing before the Nasdaq Listing Qualifications Panel
in response to the receipt of a Nasdaq Staff Determination notice
on Monday, August 14, 2006, stating that the company is not in
compliance with Nasdaq Marketplace Rule 4310c(14). Pending a
decision by the hearing panel, CNET Networks' common stock will
remain listed on The Nasdaq National Market. However, there can be
no assurance that the hearing panel will grant the company's
request for continued listing. CNET Networks previously announced
that it has not timely filed its Quarterly Report on Form 10-Q for
the quarter ended June 30, 2006 in order to address certain
accounting matters. In addition, as previously announced, CNET
Networks anticipates restating the financial statements for 2003,
2004 and 2005 included in its Annual Report on Form 10-K filed with
the SEC on March 16, 2006 and its balance sheet as of March 31,
2006 and may have to restate financial statements for additional
periods. The proposed amendments and waivers require the consent of
holders of 70% of aggregate principal amount of the notes
outstanding. If the required amount of consents are properly
delivered and not revoked prior to the expiration of the consent
solicitation, CNET Networks will pay an additional 7.0% per annum
in special interest on the notes from and after the expiration date
to, but excluding the first anniversary of the closing of the
consent solicitation. The special interest will be paid in the same
manner that regular interest is paid under the indenture. The
consent solicitation will expire at midnight, New York City time,
on October 11, 2006, unless the consent solicitation is extended or
revoked by CNET Networks. The terms and conditions of the consent
solicitation are described in a Consent Solicitation Statement
dated September 13, 2006, which is being sent to all holders of
record as of September 12, 2006. Requests for additional copies of
the Consent Solicitation Statement, the Letter of Consent or other
related documents should be directed to D.F. King & Co., Inc.,
the information and tabulation agent, at (800) 829-6551 (toll-free)
or (212) 269-5550 (collect). Questions regarding the consent
solicitation should be directed to the Convertibles Sales
Department of Banc of America Securities LLC, the solicitation
agent, at 800-654-1666 (toll-free) or 212-583-8206 (collect). CNET
Networks also announced that it has entered into a new $60.0
million, 1-year credit agreement with Bank of America, N.A., which
replaces the company's existing credit facility. The company
intends to satisfy the conditions precedent to any initial drawdown
by September 15, 2006. The borrowings may be drawn down as
revolving loans or as term loans. The borrowings are collateralized
by security interests in most of the company's assets, excluding
goodwill and certain intangible assets. This announcement is not a
solicitation of consents with respect to any securities. The
consent solicitation is being made solely by the Consent
Solicitation Statement dated September 13, 2006. Cautionary
Statement Regarding Forward-Looking Statements The press release
contains forward-looking statements concerning the company's
expected restatement of its historical financial statements, its
anticipated hearing before a Nasdaq Listing Qualifications Panel
and the availability of borrowings under the company's credit
facility. The special committee's review of the company's stock
options practices and related accounting is ongoing, and the
company's expectation that it will restate its financial statements
for 2003, 2004 and 2005 contained in the company's Annual Report on
Form 10-K filed on March 16, 2006 and the company's balance sheet
as of March 31, 2006 is based upon the special committee's
preliminary review of only some of the company's option grants. The
final result of the special committee's review will depend upon a
number of important factors including further analysis of option
grants previously reviewed and a review and analysis of other
option grants not yet reviewed. Additionally, there can be no
assurance concerning the outcomes of the hearing request, the
special committee's review or the effect of the potential
acceleration of the notes or concerning the availability of
borrowings under the company's credit facility. Forward-looking
statements are made as of the date of this press release and,
except as required by law, the company does not undertake an
obligation to update its forward-looking statements to reflect
future events or circumstances. About CNET Networks, Inc. CNET
Networks is a global media company with some of the most important
and valuable brands on the Web targeting passionate audiences. The
company's brands -- such as CNET, GameSpot, TV.com, MP3.com,
Webshots, BNET and ZDNet -- serve the technology, games and
entertainment, business, and community categories. CNET Networks
was founded in 1993 and has always been "a different kind of media
company" creating engaging media experiences through a combination
of world-class content and technology infrastructure.
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