Polycom Gets Revised, Non-binding Proposal From A Private Equity Sponsor

(RTTNews) - Polycom, Inc. (PLCM) announced that it has received a revised, non-binding proposal from a private equity sponsor that was previously described as "Sponsor 1" in the Registration Statement on Form S-4 filed by Mitel Networks Corp. (MITL, MNW.TO) with the SEC on May 13, 2016.

Polycom's Board of Directors has determined that Sponsor 1's revised proposal could reasonably be expected to lead to a "Company Superior Proposal" as defined in Polycom's merger agreement with Mitel. Polycom intends to engage in discussions or negotiations with Sponsor 1 with respect to the revised proposal.

Under the terms of Sponsor 1's revised proposal, existing Polycom stockholders would receive a cash dividend of $11.00 per share and Sponsor 1 would purchase from Polycom $650 million in shares of a new convertible preferred stock of Polycom.

After the proposed transaction, Sponsor 1 would own 56% of Polycom's outstanding equity on an as-converted basis. The conversion price of the new preferred stock would be $3.50 per share post-transaction and the preferred stock would have an in kind dividend rate of 8%.

The revised proposal also stated the Sponsor 1 would be prepared to offer existing Polycom stockholders the opportunity to exchange the $11.00 per share cash dividend for an interest in up to $250 million of the new convertible preferred stock, subject to pro ration, which exchange would be offered through a new special purpose vehicle controlled by Sponsor 1 and, to the extent accepted by Polycom stockholders, would reduce by a like amount the amount of preferred stock to be purchased by Sponsor 1. Shares in the special purpose vehicle would not be listed on an exchange or transferable.

In addition, Sponsor 1 stated that it would be prepared to consider an alternative transaction structure in which Sponsor 1 would acquire Polycom in a "take private" transaction for $11.50 per share in cash and a contingent value right worth up to $3.00 per share. Under Sponsor 1's proposal, the cash dividend, the repayment of Polycom's existing debt and the termination fee payable to Mitel would be funded with the proceeds of the sale to Sponsor 1 of the $650 million of the foregoing preferred stock, $870 million of new debt financing, and cash on Polycom's balance sheet (including both onshore and offshore cash).

The Polycom Board will consider the outcome of its discussions or negotiations with Sponsor 1 to determine the course of action that is in the best interest of Polycom and its stockholders. There can be no assurance that discussions or negotiations will result in a binding proposal from Sponsor 1, that the Polycom Board will determine that any such proposal is a "Company Superior Proposal" or that a transaction with Sponsor 1 will be approved or consummated on any particular terms or at all.

Polycom's Board has not changed its recommendation in support of Polycom's merger with Mitel. Polycom's Board is not approving, endorsing, recommending or deeming advisable the proposal set forth in Sponsor 1's offer and is not expressing any intent to do so.

Mitel noted that its offers superior and greater upside to both Polycom and Mitel.

In April 2016, Mitel Networks Corp. said it agreed to acquire Polycom in a cash and stock transaction valued at around $1.96 billion. As per the definitive agreement, Polycom stockholders would be entitled to $3.12 in cash and 1.31 Mitel common shares for each share of Polycom common stock, or $13.68 based on the closing price of a Mitel common share on April 13.