ITEM 1.01 – ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On January 18, 2022, Ciena Corporation (the “Company”) entered into an Indenture among the Company, as issuer, certain domestic subsidiaries of the Company, as guarantors (collectively, the “Guarantors”), and U.S. Bank National Association, as trustee (the “Trustee”), pursuant to which it issued $400 million in aggregate principal amount of 4.00% senior notes due 2030 (the “Notes”).
The Company’s obligations under the Notes and the Indenture are irrevocably and unconditionally guaranteed, jointly and severally, on an unsecured senior basis by each of the Company’s domestic subsidiaries that is a borrower under or guarantor with respect to the Company’s existing term loan and senior secured asset-based revolving credit facility (the “Credit Agreements”).
The Notes and related guarantees have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction and were offered and sold in the United States to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons in accordance with Regulation S under the Securities Act.
The net proceeds from the sale of the Notes, after deducting discounts and commissions, were approximately $395.5 million. The Company intends to use the net proceeds from the Offering for general corporate purposes.
The Notes bear interest at a rate of 4.00% per annum and mature on January 31, 2030. Interest is payable on the Notes in arrears on January 31 and July 31 of each year, commencing on July 31, 2022.
The Notes and related subsidiary guarantees are the general unsubordinated unsecured senior obligations of the Company and the Guarantors, respectively, and (i) rank equally in right of payment with all other existing and future senior indebtedness of the Company and the Guarantors; (ii) are effectively subordinated to all existing and future secured indebtedness of the Company and the Guarantors, including indebtedness under the Credit Agreements, to the extent of the value of the assets securing such indebtedness; (iii) are structurally subordinated to all existing and future obligations, including indebtedness, of the Company’s subsidiaries that do not guarantee the Notes; and (iv) are senior in right of payment to all of the Company’s existing and future unsecured indebtedness that is, by its terms, expressly subordinated in right of payment to the Notes.
The Indenture contains restrictive covenants that limit the ability of the Company and the Restricted Subsidiaries (as defined in the Indenture) or the Guarantors, as applicable, to, among other things, create certain liens or consolidate or merge with or into, or sell, lease, transfer, convey or otherwise dispose of all or substantially all the assets of the Company or the Company and its subsidiaries taken as a whole. These covenants are subject to a number of important exceptions and qualifications as set forth in the Indenture.
The Indenture provides for events of default (subject in certain cases to customary grace and cure periods) that include, among others, nonpayment of principal or interest when due, breach of covenants or other agreements in the Indenture, defaults in payment of certain other indebtedness and certain events of bankruptcy or insolvency. Generally, if an event of default occurs, the Trustee or the holders of at least 25% in principal amount of the outstanding Notes may declare the principal of and accrued but unpaid interest on all of the Notes to be due and payable immediately, provided that such amounts become due and payable without any further action or notice in the case of an event of bankruptcy or insolvency that constitutes an event of default.
