If these bonds were converted to stock, would it require an SEC filing? Thanks in advance.
IDCC doesn't appear to have any interest in converting the bonds to stock. Say's so right in the 10q. I've been researching these bond issues for the past week or two to try to figure out what the purpose is. Here's some of what I found out so far(the numbers are as close as I could come up with, I'm not an accountant):
2016 Notes, in a nutshell: -Borrowed $230 million -Paid approximately $45 million for Loan Fees, Call Spread transaction fees, and Interest -Repaid the $230 million in cash -The IDCC purchased calls expired worthless -IDCC issued 23667 shares to warrant purchaser (worth $1.5 million at the time)since they didn't close out warrants at same time as calls and IDCC stock rose considerably. -Total 5 year cost to borrow $230 million=$45 million and 23667 shares issued to warrant holder. No notes were converted to shares.
2020 Notes, in a nutshell: -Borrowed $316 million -Paid $9.3 million dollar loan fee -Paid $21.4 million for Call Spread transaction fees -Paid $21.2 million in interest -Calls and warrants expired worthless -Repaid $316 loan principal in cash -Total 5 year cost to borrow $316 million=$51.9 million, No notes were converted to shares
2024 Notes, Part A(what they paid off already) -Borrowed $273.8 million -Paid $39.7 million for Loan Fees, Call/Spread fees, and 3 years interest -Repaid the $273.8 million in cash -Received a credit for partially closing out the Call/Spread transaction early (credit included in above costs), calls and warrants were out of the money at the time -Repaid the $273.8 million in cash with 2027 loan proceeds -Total 3 year cost to borrow $273.8 million=$39.7 million, No notes were converted to shares
2024 Notes, Part B(the ones you're inquiring about) -Borrowed $126.2 million -Paid $1.4 million loan fee(bifurcated from Part A) -Will pay about $12.6 million in interest -Paid $8.1 million in Call/Spread transaction fees(Bifurcated from Part A) -Currently the Calls are in the money and the Warrants are out of the money each controlling about 1.6 million shares. -10q states they only intend to convert the Notes to cash -I believe the Calls/Warrants are going to play a big part in the stock price like the did in 2016. -Max gain for IDCC from Call/Spread is $21.6 million -Max loss if price drops below $81.29 is $22.1 million -Breakeven price is around $95/share
The Calls will probably convert or expire when the Notes are converted to cash. The Warrants probably have a later expiration for tax purposes but I haven't been able to find when they are scheduled to expire. The 2016 Warrants expired in daily tranches over like a 2 month period after the Notes were converted to cash. Pretty interesting what the stock price did at that time.
Looks like some risky and not very cheap financing to me just to get a tax break on the interest paid. Certainly hasn't covered the interest received from investing the net loan proceeds and they had plenty of cash to buy back their stock without these loans. To be Continued.....?
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