Cyberonics Announces Settlement of Convertible Note Litigation
HOUSTON, April 21 /-/ -- Cyberonics, Inc. (Nasdaq:
CYBX) today announced that it has settled the previously pending legal
proceedings with note holders regarding an alleged default and acceleration
of the company's $125 million of 3.0% convertible notes due September 27,
2012 ("Notes").
After receiving a notice in October 2006 from Wells Fargo, N.A., the
indenture trustee, purporting to accelerate the Notes, the company filed a
lawsuit seeking a declaration that it was not in default. In June 2007, the
federal district court ruled that the company did not breach the indenture,
and the trustee appealed the district court's ruling. With the appeal still
pending in the appellate court, the parties have now reached an agreement
to settle the proceedings.
In exchange for dismissal of Cyberonics' lawsuit and a release from all
claims of breach, the company has agreed to repurchase for par value any
Note tendered to Cyberonics on December 27, 2011, nine months in advance of
the maturity of the Notes. This settlement allows the company to reflect
the Notes as a long-term liability at the close of its fiscal year, April
25, 2008. Cyberonics will make no additional changes to the terms of the
indenture, apart from the supplemental repurchase right.
"We are pleased to be able to reach an acceptable resolution of this
litigation," commented Dan Moore, Cyberonics' President and Chief Executive
Officer. "Although we remain confident in our legal position, the
improvement to our balance sheet resulting from the settlement provides us
with additional fiscal flexibility in our on-going efforts to enhance
shareholder value."
About Cyberonics, Inc. and VNS Therapy(TM)
Cyberonics, Inc. (NASDAQ: CYBX) is a medical technology company with
core expertise in neuromodulation. The company developed and markets the
Vagus Nerve Stimulation (VNS) Therapy(TM) System, which is FDA-approved for
the treatments of epilepsy and treatment-resistant depression. The VNS
Therapy System uses a surgically implanted medical device that delivers
electrical pulsed signals to the vagus nerve. Cyberonics markets the VNS
Therapy System in selected markets worldwide.
Additional information on Cyberonics and VNS Therapy is available at
http://www.cyberonics.com and http://www.vnstherapy.com.
Safe harbor statement
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. These
statements can be identified by the use of forward-looking terminology,
including "may," "believe," "will," "expect," "anticipate," "estimate,"
"plan," "intend," and "forecast," or other similar words. Statements
contained in this press release are based upon information presently
available to us and assumptions that we believe to be reasonable. We are
not assuming any duty to update this information should those facts change
or should we no longer believe the assumptions to be reasonable. Investors
are cautioned that all such statements involve risks and uncertainties,
including without limitation, statements concerning reflecting the Notes as
a long-term liability on our balance sheet and improving shareholder value.
Our actual results may differ materially. Important factors that may cause
actual results to differ include, but are not limited to: continued market
acceptance of VNS Therapy and sales of our product; the development and
satisfactory completion of clinical trials and/or market test and/or
regulatory approval of VNS Therapy for the treatment of other indications;
satisfactory completion of post-market studies required by the U.S. Food
and Drug Administration as a condition of approval for the
treatment-resistant depression indication; adverse changes in coverage or
reimbursement amounts by third-parties; intellectual property protection
and potential infringement claims; maintaining compliance with government
regulations and obtaining necessary government approvals for new
indications; product liability claims and potential litigation; reliance on
single suppliers and manufacturers for certain components; the accuracy of
management's estimates of future expenses and sales; the results of the
previously disclosed governmental inquiries; the potential identification
of material weaknesses in our internal controls over financial reporting;
risks and costs associated with such governmental inquiries and any
litigation relating thereto or to our stock option grants, procedures, and
practices (including the previously disclosed private litigation);
uncertainties associated with stockholder litigation; and other risks
detailed from time to time in our filings with the Securities and Exchange
Commission (SEC). For a detailed discussion of these and other cautionary
statements, please refer to our most recent filings with the SEC, including
our Annual Report on Form 10-K for the fiscal year ended April 27, 2007.
Contact information
Greg Browne, CFO
Cyberonics, Inc.
100 Cyberonics Blvd.
Houston, TX 77058
Main: (281) 228-7262
Fax: (281) 218-9332
ir@cyberonics.com
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