Mentor Graphics proceeds with convertible debt offering

WILSONVILLE, USA: Mentor Graphics Corp. announced that the company’s Board of Directors had affirmed its decision to proceed with the $253 million offering of 4.00 percent Convertible Subordinated Debentures due 2031 (the “4.00% Debentures”) announced on March 29, 2011.

The offering of the 4.00 percent Debentures allows the company to replace not only its outstanding 6.25 percent Convertible Subordinated Debentures due 2026 but also its $18.5 million secured term loan. The offering provides the following financial benefits:

* Reduces the cash interest rate on outstanding debentures from 6.25 percent to 4.00 percent;
* Increases the conversion price on Mentor’s debentures from $17.97 to $20.54 per share;
* Reduces dilution by using $25.0 million of proceeds to repurchase approximately 1.7 million shares;
* Extends the date on which debenture holders can force repayment by five years, from 2013 to 2018;
* Provides Mentor the ability to negotiate an amendment to extend the term of its existing revolving credit facility beyond 2013; and
* Effectively reduces interest costs from the company’s secured term loan from 4.81 percent to 4.00 percent.

The initial purchasers of the 4.00 percent Debentures exercised their over-allotment option to purchase $33 million of additional 4.00 percent Debentures on March 30, 2011.

Gregory K. Hinckley, president and CFO of Mentor, stated, “The high level of institutional investor interest in our new convertible debt offering resulted in attractive terms for the company and demonstrated strong investor support for Mentor’s business strategy and long-term prospects.”