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Central European Media Enterprises Prices Offering of $425 Million of 3.50% Senior Convertible Notes Due 2013
March 4, 2008, Hamilton, Bermuda
Hamilton, Bermuda — March 4, 2008 - Central European Media Enterprises Ltd. (“CME”) (Nasdaq Global Select Market/Prague Stock Exchange: CETV) today announced the pricing of its previously announced offering of $425 million aggregate principal amount of 3.50% senior convertible notes due 2013. CME has granted the initial purchasers an option to purchase up to $50 million aggregate principal amount of additional notes to cover over-allotments. The notes are being offered to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act").
The notes will pay interest semi-annually at a rate of 3.50% per year, payable on March 15 and September 15 of each year, beginning September 15, 2008, and will mature on March 15, 2013. Prior to December 15, 2012, the notes will be convertible upon specified events and, thereafter, at any time, based on an initial conversion rate of 9.5238 shares of CME’s Class A common stock per $1,000 principal amount of notes (which is equivalent to an initial conversion price of approximately $105.00 or a 25% conversion premium based on the closing sale price of $84.00 per share of CME’s Class A common stock on the Nasdaq Global Select Market on March 4, 2008). Upon conversion, CME will have the right to deliver (i) shares of CME's Class A common stock or (ii) cash and, if applicable, shares of CME's Class A common stock.
The notes will be senior obligations of CME and will rank equally in right of payment with its existing and future senior debt. The notes will be jointly and severally guaranteed on a senior basis by two of CME’s wholly-owned subsidiaries. The notes will be secured by a security interest in the shares of the two subsidiary guarantors and certain contractual claims of CME.
The net proceeds from this offering, after deducting the initial purchasers’ discounts, estimated offering expenses and the cost of the capped call transactions described below, will be approximately $358.3 million (or approximately $400.7 million if the initial purchasers exercise their over-allotment option in full (after deducting the cost of the additional capped call transactions relating to the additional notes sold upon exercise of the over-allotment exercise.CME intends to use net proceeds from the offering to purchase additional ownership interests in CME’s operations in Ukraine and for general corporate purposes.
In connection with this offering, CME is entering into capped call transactions with affiliates of several initial purchasers. The capped call transactions are expected to reduce the potential dilution upon conversion of the notes. Pursuant to these capped call transactions, CME has purchased call options from the counterparties with a strike price equal to the conversion price of the notes and a cap price of $151.20 per share (which is 80% higher than the closing sale price of $84.00 per share of CME Class A common stock on the Nasdaq Global Select Market on March 4, 2008).
In connection with hedging the capped call transactions, CME expects that the counterparties or their affiliates will purchase shares of CME’s Class A common stock in secondary market transactions and/or enter into various derivative transactions with respect to shares of CME’s Class A common stock preceding, concurrently with or shortly after the pricing of the notes. These activities could have the effect of increasing or preventing a decline in the price of CME’s Class A common stock concurrently with or following the pricing of the notes. In addition, the counterparties may modify or unwind their hedge positions by purchasing or selling CME’s Class A common stock in secondary market transactions and/or entering into or unwinding various derivative transactions following the pricing of the transaction (and are likely to do so during any cash settlement averaging period related to conversion of the notes).
This press release does not constitute an offer to sell or the solicitation of an offer to buy securities. Any offer of the securities will be made only by means of an offering memorandum. The notes, the subsidiary guarantees and the shares of CME Class A common stock issuable upon conversion have not been registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration.
For additional information, please contact:
Romana Tomasova
Director of Corporate Communications
Central European Media Enterprises
+44 (0)20 7430 5357
romana.tomasova@cme-net.com
