McDATA Corp., a Broomfield, Colo.-based firm specializing in the production of fiber channel switches and software for storage area networks, has entered into a derivatives-based share option transaction in order to convert part of a recent USD150 million convertible subordinated notes issue into company stock. Linda Dellett, v.p. in investor relations, said under terms of the issue the notes are convertible into shares of McDATA's Class A common stock.
The transaction was executed in order to mitigate the potential dilution of the notes in the conversion trade, explained Dellett. The firm bought options at the conversion rate of USD10.71 on Feb. 3, and then sold them back the next day with a strike at USD15.08, according to Dellett. The company executed the trades with Banc of America Securities, which also underwrote the note sale. John Roehm, spokesman at BofA in San Francisco, declined comment.
