Terayon Pays Off Bondholders in Full and Reaches Agreement to Settle Shareholder Suit
23 March 2006 - 8:15AM
PR Newswire (US)
SANTA CLARA, Calif., March 22 /PRNewswire-FirstCall/ -- Terayon
Communication Systems, Inc. (NASDAQ:TERNE), today announced that it
received a notice of acceleration from bondholders of Terayon's 5%
Convertible Subordinated Notes due 2007, and on March 21, 2006,
paid in full the entire principal amount of the outstanding Notes,
including all accrued and unpaid interest thereon and related fees,
for a total of $65.6 million. Separately, Terayon has reached an
agreement to settle a shareholder class action lawsuit initially
filed in April 2000. "These two separate business decisions were
made in the best interests of Terayon," said Jerry Chase, CEO,
Terayon. "On the bond issue, we reviewed several restructuring
options, and chose the most cost-effective -- paying off the bonds
now. We have also reached agreement to settle our six-year-old
shareholder suit after determining that it, too, was more
cost-effective to settle rather than continue to litigate. These
were the right decisions to make, and we intend to execute on our
business plan without the further distraction of these two issues."
Bondholder Repayment As previously disclosed, on January 12, 2006,
Terayon received a letter from holders of more than 25% in
aggregate principal amount of Notes outstanding providing written
notice to Terayon of default under the Indenture for the Notes
based on the company's failure to file its Form 10-Q for the
quarterly period ended September 30, 2005. Terayon was unable to
cure the default within 60 days of the written notice, March 13,
2006, which triggered an Event of Default under the Indenture. The
Event of Default enabled the holders of at least 25% in aggregate
principal amount of Notes outstanding to accelerate the maturity of
the Notes by written notice and declare the entire principal amount
of the Notes, together with all accrued and unpaid interest
thereon, to be due and payable immediately. Shareholder Settlement
On March 17, 2006, Terayon entered into a Memorandum of
Understanding (MOU) providing for the settlement of the securities
class action entitled In re Terayon Communication Systems, Inc.
Securities Litigation, Case No. C-00- 1967-MHP, pending in the
United States District Court, Northern District of California. As
previously disclosed, the amended complaint alleged that Terayon
and certain of its officers and directors (collectively, the
"Defendants") violated the federal securities laws by issuing
materially false and misleading statements and failing to disclose
material information regarding Terayon's technology. The class
action included claims for damages on behalf of those who purchased
or otherwise acquired Terayon's securities (the "Affected
Securities") during the class period of November 15, 1999 to April
11, 2000 (the "Plaintiff Class"). In accordance with the settlement
outlined in the MOU, the Defendants shall pay or cause to be paid
to the Plaintiff Class an amount of fifteen million dollars
($15,000,000). Payment will be paid within 45 days of the execution
of the MOU or 15 days after court approval of the Settlement,
whichever is later, but in no event earlier than May 10, 2006.
Terayon expects to pay approximately $2.3 million of this amount,
and its insurance carriers have agreed to pay the remaining
settlement amount. The settlement is subject to final approval by
the court. In consideration of the payment of the settlement funds
described above, the Plaintiff Class has agreed, upon final court
approval, to dismiss the class action with prejudice and release
all known and unknown claims arising out of or relating to, or in
connection with the purchase or acquisition of the Affected
Securities during the class period which have been or could have
been asserted by any member of the Plaintiff Class. All parties
have agreed to use their best efforts to finalize and execute the
Stipulation and such other documentation as may be required or
appropriate to obtain court approval of the settlement upon the
terms set forth in the MOU. About Terayon Terayon Communication
Systems, Inc. provides real-time digital video networking
applications to cable, satellite and telecommunication service
providers worldwide, which have deployed more than 6,000 of
Terayon's digital video systems to localize services and
advertising on-demand and brand their programming, insert millions
of digital ads, offer HDTV and other digital video services.
Terayon maintains its headquarters in Santa Clara, California; has
sales and support offices worldwide and is on the web at
http://www.terayon.com/. MEANINGFUL CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS Except for historical information
contained in this press release, the matters discussed in this news
release are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements are subject to a number of risks and uncertainties that
may cause actual results to differ materially from those contained
in the forward- looking information, and are based on current
expectations, estimates, forecasts and projections of future
Company or industry performance based on management's judgment,
beliefs, current trends and market conditions. Such forward-looking
statements include, but are not limited to, statements relating to
the settlement of the pending class action litigation and Terayon's
financial condition, cash balances and liquidity. There can be no
assurance that the settlement of the pending class action
litigation will be approved by the court, that members of the
plaintiff class will not appeal or raise objections or that
Terayon's insurers will contribute the agreed-upon amount to the
settlement, of when Terayon's subsequent processes such as
restatement of annual or quarterly financial results, audit of
annual and review of quarterly financial statements, filing of
Forms 10-K and 10-Q, complying with SEC reporting requirements and
meeting NASDAQ listing requirements will be completed, that the
circumstance of the restatement will not result in a finding of a
material weakness in the Company's internal control over financial
reporting, that other accounting errors or control deficiencies
which individually or in the aggregate constitute a material
weakness, will not be identified during the preparation and audit
of the consolidated financial statements, that adjustments for
other periods will not be required, the need for and effective
implementation of any related corrective actions. In addition, our
financial results, liquidity and stock price may suffer as a result
of the previously announced restatement and any subsequent action
by NASDAQ, the potential de-listing of our common stock by NASDAQ,
the cost of completing the restatement and, if necessary, the
re-audit of the Company's financial statements, the Company's
ability to control operating expenses and maintain adequate cash
balances for operating the business going forward, the ongoing SEC
investigation, any adverse response of the Company's vendors,
customers, stockholders, media and others relating to the delay or
restatement of the Company's financial statements and other
required SEC filings, adverse changes in economic, business,
competitive, technological and regulatory factors and trends, the
review and application of the Company's accounting processes,
policies and procedures, and additional uncertainties related to
accounting issues. Actual outcomes and results may differ
materially from what is expressed, forecasted, or implied in any
forward-looking statement. Additional information concerning these
and other risk factors affecting Terayon's business can be found in
prior press releases as well as in Terayon's public periodic
filings with the Securities and Exchange Commission, available via
Terayon's web site at http://www.terayon.com/. Terayon disclaims
any intent or obligation to update these forward-looking statements
beyond the date of this release. Note: Terayon and the Terayon logo
are registered trademarks of Terayon Communication Systems, Inc.
All other trademarks are property of their respective owners.
DATASOURCE: Terayon Communication Systems, Inc. CONTACT: Press:
Rebecca West of AtomicPR, +1-415-402-0230 or , or, Investors:
Kirsten Chapman or Moriah Shilton, , both of Lippert/Heilshorn
& Associates, +1-415-433-3777, all for Terayon Communication
Systems, Inc. Web site: http://www.terayon.com/
Copyright
Terayon Communication Systems (NASDAQ:TERNE)
Historical Stock Chart
From Jun 2024 to Jul 2024
Terayon Communication Systems (NASDAQ:TERNE)
Historical Stock Chart
From Jul 2023 to Jul 2024