ARRIS Group, Inc. (NASDAQ GS: ARRS)

 

2.00% Convertible Senior Notes due 2026

 

$240 million

 

$36.00 million (15%)

 

November 15, 2026

 

UBS Investment Bank (Stabilization agent) & Deutsche Bank Securities Inc.

 

100% principal amount

 

2.00% per annum from November 13, 2006, payable semi-annually in arrears on May 15 and November 15 each year, beginning on May 15, 2007

 

Approximately 40.00%

 

62.1504

 

Approximately $16.09, priced off the closing price of $11.49 on November 6, 2006

 

Redeemable at the Issuer’s option on or after November 15, 2013 at 100% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the redemption date.

 

On each of November 15, 2013, November 15, 2016 and November 15, 2021, at a purchase price in cash equal to 100% of the principal amount of the Notes, plus any accrued and unpaid interest to, but excluding, the purchase date.

 

The Notes may be surrendered for conversion if

 

(i) prior to November 15, 2025, during any calendar quarter after the calendar quarter ending December 31, 2006 (and only during such calendar quarter), if the closing sale price of Issuer’s common stock, for each of 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter, exceeds 120% of the conversion price in effect on the last trading day of the immediately preceding calendar quarter;

 

(ii) prior to November 15, 2025, during the five consecutive business days immediately after any five consecutive trading day period in which the average trading price per $1,000 principal amount of Notes was equal to or less than 98% of the average conversion value of the Notes during such five consecutive trading day period;

 

(iii) prior to November 15, 2025, upon occurrence of certain distributions or corporate transactions specified in the prospectus for the Notes;

 

(iv) prior to November 15, 2025, if the Issuer has called the Notes for redemption; and

 

(v) from, and including, October 15, 2013 to, and including, November 15, 2013, and at any time from, and including, November 15, 2025, to, and including, the close of business on the business day immediately preceding November 15, 2026.

 

Upon conversion, holders will receive, per $1,000 principal amount being converted, a settlement amount that is equal to the sum of the daily settlement amounts for each of the 20 trading days during the cash settlement averaging period. The daily settlement amount on a trading day consists of (i) cash equal to the lesser of (a) $50 and (b) the daily conversion value on that trading day; and (ii) to the extent such daily conversion value exceeds $50, (a) a number of shares equal to the excess of such daily conversion value over $50, divided by (b) the volume weighted average price of Issuer common stock on that trading day. The cash settlement averaging period with respect to any Note means (1) for Notes that are converted at any time on or after the 23^rd scheduled trading day prior to the maturity date of the Notes, the 20 consecutive trading days beginning on, and including, the 20^th scheduled trading day prior to the maturity date; and (2) in all other instances, the 20 consecutive trading days beginning on, and including, the third trading day after the Notes are tendered for conversion. The daily conversion value on a given trading day means one-twentieth of the product of (i) the applicable conversion rate; and (ii) the volume weighted average price of Issuer common stock on that trading day.

 

Full dividend protection—Conversion rate adjustment upon any cash distributions, tender offers or exchange offers to holders of ARRIS common stock.

 

If a fundamental change occurs, each holder will have the right, at its option, to require Issuer to repurchase for cash all or any portion of the holder’s Notes at a price equal to 100% of the principal amount of the Notes, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

 

The estimated net proceeds to Issuer from this offering will be $233.0 million (or $268.1 million if the underwriters exercise their over-allotment option in full), after deducting the underwriters’ discounts and commissions and estimated offering expenses payable by Issuer. Issuer intends to use the net proceeds of this offering for general corporate purposes, including funding future acquisitions.

 

Senior unsecured

 

The Notes will not be listed on any securities exchange or quoted in any automated quotation system.

 

Registered

 

$1,000 and integral multiples thereof

 

DTC

 

New York

If a make-whole fundamental change occurs before November 15, 2013, the conversion rate applicable to Notes that are surrendered for conversion at any time from, and including, the 30th business day before the date Issuer originally announces as the anticipated effective date of the make-whole fundamental change to, and including, the 30th business day after the actual effective date of the make-whole fundamental change (or, if the make-whole fundamental change also constitutes a fundamental change, to, and including, the fundamental change repurchase date for that fundamental change) (the “make-whole conversion period”) will be increased by an amount set forth below.

 

 

The following table sets forth the number of additional shares per $1,000 principal amount of Notes that will be added to the conversion rate applicable to Notes that are converted during the make-whole conversion period. The applicable prices set forth in the first column of the table below, and the number of additional shares, are subject to adjustment as described in the prospectus for the Notes.

If the applicable price is between two applicable prices in the table or the effective date is between two effective dates in the table, the number of additional shares will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower applicable prices and the two effective dates, as applicable, based on a 365-day year. In addition, if the applicable price is in excess of $50.00 per share (subject to adjustment), the conversion rate will not be increased in connection with that make-whole fundamental change. If the applicable price is less than $11.49 per share (subject to adjustment), the conversion rate will not be increased in connection with that make-whole fundamental change.

 

November 6, 2006, after market close

 

November 7, 2006

 

November 13, 2006

 

CUSIP: 04269Q AC 4                    ISIN: US 04269 QAC 42