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This excerpt taken from the ELN 6-K filed Mar 30, 2007. c Convertible
notes
In accordance with IAS 32 and IAS 39, the 6.5% Convertible
Notes was analysed into a debt component and a separate embedded
conversion option component. Under IFRS, prior to
28 October 2005, the conversion option in the 6.5%
Convertible Notes was classified as a derivative within
liabilities and fair valued through the income statement at each
reporting period. As a result of the decline in our share price
from $27.25 at 1 January 2005 to $7.97 at 28 October
2005, a fair value gain of $1,136.1 million was recorded
under IFRS in the year ended 31 December 2005 on the
conversion option component of our 6.5% Convertible Notes. The
market price of the 6.5% Convertible Notes fell from
$381.50 per $100.00 of principal amount at 1 January
2005 to $129.10 per $100.00 of principal amount at
28 October 2005.
The finance cost under IFRS for the 6.5% Convertible Notes
also included an amortisation charge for the discount between
the initial fair value of the debt component of the
6.5% Convertible Notes and the proceeds received on issue
of $12.5 million (2005: $12.4 million). This discount
under IFRS was determined on the issue date using a market
interest rate for an equivalent non-convertible note, and was
amortised along with issuance costs up to the original maturity
of the notes using the effective interest rate method, such that
the discounted carrying value of the debt would accrete to the
principal amount over the period to the original maturity date.
This initial discount, which reflected the initial fair value of
the conversion option, amounted to $128.7 million for the
issue as a whole, of which $71.7 million, approximately
55%, related to the remaining principal amount of
$254.0 million outstanding at 31 December 2005. Of
this $71.7 million, an amount of $46.4 million
remained outstanding at 31 December 2005.
On 28 October 2005, we removed the cash settlement feature
from the Convertible Notes and as a result, the value of the
remaining conversion option was fixed as of 28 October 2005
at $91.8 million. It was not subsequently remeasured after
this date, and was transferred from liabilities to
shareholders’ equity, being the equity portion of a
compound financial instrument. This $91.8 million increase
in shareholders’ equity represented the initial fair value
of $71.1 million of the conversion option (initial fair
value discount on the debt) on the remaining $254.0 million
of principal amount of the 6.5% Convertible Notes, plus the
increasing of shareholders’ equity, upon the removal of the
cash settlement feature, for the net cumulative
mark-to-market
loss of $20.7 million on the remaining principal amount
(that had previously been expensed to shareholders’
equity). As described above, the $71.1 million was being
amortised to interest expense over the period to the maturity
date using the effective interest rate method. The effective
interest rate of the 6.5% Convertible Notes was 15.9%. Of this
$71.1 million, $46.4 million remained unamortised at
31 December 2005.
Under US GAAP, there is no separate recognition of the
conversion option, as it was deemed to be clearly and closely
related to the debt instrument. As a result, there was no fair
value movement on the US GAAP income statement, nor an
additional
136 Elan
Corporation, plc 2006 Annual Report
Table of Contents
US
GAAP Information
finance charge for the discount arising on separation of the
instrument. Timing differences may also arise on net
gains/(charges) on debt retirements, since under US GAAP such
gains/(charges) are recorded only as such transactions occur,
whereas the requirement under IFRS to fair value the conversion
option during each period means that such gains/(charges) may
have been partially recorded in prior period(s). Consequently,
the net charge on debt retirement related to the
6.5% Convertible Notes in 2005 was $31.6 million
higher under US GAAP than under IFRS.
The difference in shareholders’ equity of
$46.4 million between US GAAP and IFRS at 31 December
2005 represented the remaining unamortised initial fair value
discount. This difference was eliminated to $Nil when the
remaining 6.5% Convertible Notes were converted or redeemed in
December 2006.
This excerpt taken from the ELN 20-F filed Feb 28, 2007. 6.5% Convertible
Notes
In November 2003, we completed the offering and sale of
$460.0 million in aggregate principal amount of
6.5% Convertible Notes, issued by Elan Capital Corporation,
an indirect wholly-owned subsidiary, and guaranteed by Elan
Corporation, plc. The 6.5% Convertible Notes were due to
mature on November 10, 2008.
Holders of the 6.5% Convertible Notes had the right to
convert the notes into fully-paid American Depository Shares
(ADSs) at a conversion price of $7.42 at any time up to
November 10, 2008 or seven trading days preceding the date
of redemption if the notes were called for redemption.
We had the right, at any time after December 1, 2006, to
redeem all or part of the 6.5% Convertible Notes then
outstanding at par, with interest accrued to the redemption date
provided that, within a period of 30 consecutive trading days
ending five trading days prior to the date on which the relevant
notice of redemption is published, the official closing price
per share of the ADSs on the NYSE for 20 trading days shall have
been at least 150% of the conversion price deemed to be in
effect on each of such trading days. Interest was paid in cash
semi-annually.
In June 2005, we retired $206.0 million in aggregate
principal amount of the 6.5% Convertible Notes, which was
purchased for approximately $255.0 million at an average
premium of approximately 4% to the market price of the
6.5% Convertible Notes at the date of purchase. The
consideration was satisfied with the issuance of 27,762,801 ADSs
at the debt conversion price of $7.42, together with
$49.1 million in cash and accrued interest of
$0.7 million. As a result of the retirement, we incurred a
net charge of $54.9 million.
In November 2006, we called for early redemption of the
remaining $254.0 million in aggregate principal amount of
the 6.5% Convertible Notes. Holders of approximately
$253.6 million of Convertible Notes elected to convert
their Convertible Notes, prior to the redemption date, into our
ADSs or ordinary shares at the Convertible Notes conversion
price of $7.42 per ADS or ordinary share. As a result of
the conversion, approximately 34.2 million ADSs or ordinary
shares were issued. The remaining $0.4 million of
outstanding Convertible
Table of Contents
Elan
Corporation, plc
NOTES TO
THE CONSOLIDATED
FINANCIAL STATEMENTS — (Continued)
Notes were redeemed in cash in December 2006. As a result of the
conversion, the unamortized deferred financing costs of
$3.5 million was written off to additional paid-in capital.
This excerpt taken from the ELN 6-K filed Mar 31, 2006. 6.5% Convertible Notes
In November 2003, we completed the offering and sale of
$460.0 million in aggregate principal amount of
6.5% Convertible Notes issued by Elan Capital Corporation,
an indirect wholly-owned subsidiary, and guaranteed by Elan
Corporation, plc. The 6.5% Convertible Notes mature on 10
November 2008.
Holders of the 6.5% Convertible Notes have the right to
convert the notes into fully-paid American Depository Shares
(ADSs) at a conversion price of $7.42 at any time up to 10
November 2008 or seven trading days preceding the date of
redemption if the notes are called for redemption.
We may, at any time after 1 December 2006, redeem all or
part of the 6.5% Convertible Notes then outstanding at par,
with interest accrued to the redemption date provided that,
within a period of 30 consecutive trading days ending five
trading days prior to the date on which the relevant notice of
redemption is published, the official closing price per share of
the ADSs on the New York Stock Exchange (NYSE) for 20
trading days shall have been at least 150% of the conversion
price deemed to be in effect on each of such trading days.
In June 2005, we retired $206.0 million in aggregate
principal amount of the 6.5% Convertible Notes, which was
purchased for approximately $255.0 million at an average
premium of approximately 4% to the market price of the
6.5% Convertible Notes at the date of purchase. The
consideration was satisfied with the issuance of 27,762,801 ADSs
at the debt conversion price of $7.42, together with
$49.1 million in cash and accrued interest of
$0.7 million. As a result of the retirement, we incurred a
net charge of $23.3 million, including $5.1 million
for the write-off of deferred financing costs.
From the date of adoption of IAS 32 and IAS 39 on 1 January
2005 to 28 October 2005, when the cash settlement provision that
existed on issue was revoked, the conversion option component of
the 6.5% Convertible Notes was deemed a liability and was
marked-to-market
through the income statement, consistent with the accounting for
other derivative assets and derivative liabilities.
As a result of the decline in our share price from $27.25 at
1 January 2005 to $7.97 at 28 October 2005, a fair value
gain of $1,136.1 million was recorded in the year ended
31 December 2005 (2004: $Nil) on the conversion option
component of our 6.5% Convertible Notes. The market price
of the 6.5% Convertible Notes fell from $381.50 per
$100.00 of principal amount at 1 January 2005 to
$129.10 per $100.00 of principal amount at 28 October 2005.
From 28 October 2005, when the cash settlement option was
revoked, the conversion option was recognised as the equity
component of a compound financial instrument and included as
part of shareholders’ equity and will not be subsequently
114 Elan Corporation, plc 2005 Annual Report
Table of Contents
This excerpt taken from the ELN 20-F filed Mar 30, 2006. 6.5% Convertible
Notes
In November 2003, we completed the offering and sale of
$460.0 million in aggregate principal amount of
6.5% Convertible Notes issued by Elan Capital Corporation,
an indirect wholly-owned subsidiary, and guaranteed by Elan
Corporation, plc. The 6.5% Convertible Notes mature on
November 10, 2008.
Holders of the 6.5% Convertible Notes have the right to
convert the notes into fully-paid American Depository Shares
(ADSs) at a conversion price of $7.42 at any time up to
November 10, 2008 or seven trading days preceding the date
of redemption if the notes are called for redemption.
We may, at any time after December 1, 2006, redeem all or
part of the 6.5% Convertible Notes then outstanding at par, with
interest accrued to the redemption date provided that, within a
period of 30 consecutive trading days ending five trading days
prior to the date on which the relevant notice of redemption is
published, the official closing
Table of Contents
Elan
Corporation, plc
NOTES TO
THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
price per share of the ADSs on the NYSE for 20 trading days
shall have been at least 150% of the conversion price deemed to
be in effect on each of such trading days. Interest is paid in
cash semi-annually.
In June 2005, we retired $206.0 million in aggregate
principal amount of the 6.5% Convertible Notes, which was
purchased for approximately $255.0 million at an average
premium of approximately 4% to the market price of the 6.5%
Convertible Notes at the date of purchase. The consideration was
satisfied with the issuance of 27,762,801 ADSs at the debt
conversion price of $7.42, together with $49.1 million in
cash and accrued interest of $0.7 million. As a result of
the retirement, we incurred a net charge of $54.9 million,
including $5.1 million for the write off of deferred
financing costs.
This excerpt taken from the ELN 6-K filed Apr 11, 2005. 6.5% Convertible Notes In November 2003, we completed the offering and sale of $460.0 million in aggregate principal amount of 6.5% Convertible Notes issued by Elan Capital Corporation, an indirect wholly-owned subsidiary, and guaranteed by Elan Corporation, plc. The 6.5% Convertible Notes mature on 10 November 2008. Holders of the 6.5% Convertible Notes have the right to convert the notes into fully-paid American Depository Shares (“ADSs”) at a conversion price of $7.42 at any time up to 10 November 2008 or seven trading days preceding the date of redemption if the notes are called for redemption. We may, at any time after 1 December 2006, redeem all or part of the 6.5% Convertible Notes then outstanding at par, with interest accrued to the redemption date provided that, within a period of 30 consecutive trading days ending five trading days prior to the date on which the relevant notice of redemption is published, the official closing price per share of the ADSs on the NYSE for 20 trading days shall have been at least 150% of the conversion price deemed to be in effect on each of such trading days. Interest is paid in cash semi-annually. Interest charged in the year ending 31 December 2004 amounted to $29.9 million (2003: $4.1 million). At 31 December 2003, interest accrued was $4.1 million (2003: $4.1 million). | EXCERPTS ON THIS PAGE:
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