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TiVo lines up war chest to chase Intellectual Property suits

Most companies which have hard assets, like cable operators, can blithely announce a debt offering on the stock market and investors barely blink, but

By PETER WHITE

Published: 10 March, 2011

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Most companies which have hard assets, like cable operators, can blithely announce a debt offering on the stock market and investors barely blink, but for a largely debt free, loss making, but cash positive company like TiVo, it’s a bit of a news story, and headlines were abounding this week along the lines of “Legal battles forces TiVo to borrow funds.”

The truth is that TiVo has no appreciable debt (around $35 million), which is why it is getting this debt, scheduled for 2016 repayment, away at just 4%, raising some $150 million, while it still has a war chest of $209 million in cash. This is simple pragmatism, and it took the temperature of the market a day earlier saying it would offer a private placement of $120 million convertible senior notes, but actually raised that by $30 million because its advisors have sensed the appetite was there. They have also asked for an additional $22.5 million to cover over-allotments.

This will almost double the amount of cash that TiVo has in the coffers both to fight the various legal actions that it has either instigated, or the nuisance counter suits that this has brought. By doing this it shows that TiVo is not going to run out of cash, and once these notes are issued, it shows that the company is serious about protecting its intellectual property. Some of the funds will also be used for further R&D.

If note holders would rather have shares, these notes can be converted at any time into common stock at the price of $11.16 per share, about a 27.5% premium on its current share price of $8.75.

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