Credence bond holders to call in debt after merger with LTX

Shareholders of Credence Systems, the Milpitas maker of semiconductor design-and-testing gear, and its competitor LTX of Norwood, Mass., are set to vote Thursday on the proposed merger of the two companies.

On Monday, holders of Credence’s 3.5% Convertible Senior Subordinated Notes due 2010 threw the company a curveball after they sent Credence a letter saying that the proposed merger would “constitute a change of control” requiring Credence to “offer to repurchase all of the outstanding Notes (due in 2010) at 100% of the principal amount thereof plus accrued and unpaid interest,” according to an SEC filing Tuesday.

Credence and LTX are now “reviewing and considering the positions taken in the letter” but assured investors that the $156 million it holds in cash and cash equivalents, combined with $71.5 million held by LTX would be sufficient to meet its obligation, if the merger is found to be a change of control.


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