Lawson is up to something
This is the first company I’ve seen in tech-land using the debt markets to enhance shareholder returns, and staying public. Given the maintenance revenue, it makes a lot of sense. Here’s the summary on Lawson (LWSN:NASDAQ) from CIBC’s research team:
“Lawson Announces $200 Million Convertible Offering
After Monday’s close Lawson announced that it will offer $200 million of convertible senior notes due 2012 and will grant the option of an additional $40 million of notes to cover potential over-allotments. The terms of the notes, including conversion price and interest rate, have yet to be determined and are subject to negotiations between LWSN and the initial buyers.
LWSN intends to use $70 million of the proceeds as part of its previously stated stock repurchase program. In addition, the company will enter into several types of derivative hedge transactions with the holders of these notes to minimize the potential dilutive effect of the securities.
We note that as of February 28th LWSN had approximately $277 million of net cash on its balance sheet.”
Sun Microsystems did the same deal ($700 million convertible notes) with KKR earlier this year. Press release here. So the (option to go private) trend for technology companies has already started.