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8-K - FORM 8-K - TELECOMMUNICATION SYSTEMS INC /FA/ | w76261e8vk.htm |
EXHIBIT 99.1
TELECOMMUNICATION
SYSTEMS, INC. PRICES OFFERING OF $90 MILLION
OF 4.5% CONVERTIBLE SENIOR NOTES
OF 4.5% CONVERTIBLE SENIOR NOTES
ANNAPOLIS, MD, November 11, 2009 TeleCommunication Systems, Inc. (TCS) (NASDAQ: TSYS) today
announced the pricing of its offering of $90 million aggregate principal amount of 4.5% convertible
senior notes due 2014. The offering is expected to close on or about November 16, 2009, subject to
the satisfaction of various customary closing conditions. TCS has also granted the initial
purchasers of the notes the right to purchase up to an additional $13.5 million aggregate principal
amount of notes solely to cover over-allotments.
The notes will be convertible into shares of TCSs Class A common stock based on an initial
conversion rate for the notes of 96.637 shares of TCSs Class A common stock per $1,000 principal
amount of notes, which is equivalent to an initial conversion price of approximately $10.35 per
share of Class A common stock. While this represents an approximately 30% conversion premium over
todays closing price of TCSs Class A common stock of $7.96 per share, the effect of the call
spread described below will be to increase the effective conversion premium of the notes to 60%
above todays closing price, or to $12.74 per share.
Interest on the notes will be payable semiannually on November 1 and May 1 of each year, beginning
May 1, 2010. The notes will mature on November 1, 2014, unless previously converted in accordance
with their terms. The notes will be TCSs senior unsecured obligations and will rank equally with
all of its present and future senior unsecured debt and senior to any future subordinated debt. The
notes will be structurally subordinate to all present and future debt and other obligations of
TCSs subsidiaries and will be effectively subordinate to all of TCSs present and future secured
debt to the extent of the collateral securing that debt. The notes are not redeemable by TCS prior
to the maturity date.
In connection with the note offering, TCS entered into convertible note hedge and warrant
transactions (the call spread) with certain counterparties. If the initial purchasers exercise
their over-allotment option, TCS intends to proportionally increase the size of the call spread
consideration. TCS has been advised by the call spread counterparties that in connection with
establishing their initial hedge of the convertible note hedge and warrant transactions, they
expect to enter into various derivative transactions with respect to TCSs Class A common stock
concurrently with or following the pricing of the notes. These activities could have an effect on
the market price of TCSs Class A common stock.
TCS intends to use the net proceeds of the offering and the warrant transaction for general
corporate purposes, including working capital, and may include the acquisition or investment in
businesses, products and technologies that are complementary to its own. TCS also intends to use
approximately 10.45% of the gross proceeds of the offering to pay TCSs cost of the call spread
transactions.
The notes were offered and sold to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended. This announcement is neither an offer to sell nor a
solicitation of an offer to buy any of these securities and shall not constitute an offer,
solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful. The
notes, the shares of Class A common stock underlying such notes, the convertible note hedge
transactions, the warrants and the shares of Class A common stock underlying such warrants have not
been and will not be registered under the Securities Act of 1933, as amended, or any state
securities laws and may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
About TeleCommunication Systems
TeleCommunication Systems, Inc. (TCS) (NASDAQ:TSYS) engineers and delivers wireless communications
technology, including E9-1-1 services and commercial applications like navigation that use the
precise location of a wireless device, and secure satellite-based communications systems and
services.
This announcement contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as
amended. These statements are based upon TCSs current expectations and assumptions that are
subject to a number of risks and uncertainties that would cause actual results to differ materially
from those anticipated. The words, believe, expect, intend, anticipate, and variations of
such words, and similar expressions identify forward-looking statements, but their absence does not
mean that the statement is not forward-looking. Statements in this announcement that are
forward-looking include, but are not limited to statements that (i) TCSs expectation to close the
offering of the notes on or about November 16, 2009; (ii) TCSs intention regarding the use of the
net proceeds of the offering; (iii) the intention of the counterparties and/or their respective
affiliates to the convertible note hedge and warrant transactions to enter into various derivative
transactions; and (iv) TCSs expectations regarding the effect on the price of its Class A common
stock from the convertible note hedge and warrant transactions and various derivative transactions.
Additional risks and uncertainties are described in the Companys filings with the Securities and
Exchange Commission (SEC). These include without limitation risks and uncertainties relating to the
Companys financial results and the ability of the Company to (i) sustain profitability, (ii)
continue to rely on its customers and other third parties to provide additional products and
services that create a demand for TCS products and services, (iii) conduct its business in foreign
countries, (iv) develop software and provide services without any errors or defects, (vii) protect
its intellectual property rights, (viii) evaluate and execute acquisitions and investments, (ix)
not incur substantial costs from product liability claims relating to its software, and (x)
implement its sales and marketing strategy. Existing and prospective investors are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of the date hereof.
The Company undertakes no obligation to update or revise the information in this press release,
whether as a result of new information, future events or circumstances, or otherwise.