HOUSTON, April 21 /PRNewswire-FirstCall/ -- Cyberonics, Inc. today announced that it has settled the previously pending legal proceedings with note holders regarding an alleged default and acceleration of the company's $125 million of 3.0% convertible notes due September 27, 2012 ("Notes").
After receiving a notice in October 2006 from Wells Fargo, N.A., the indenture trustee, purporting to accelerate the Notes, the company filed a lawsuit seeking a declaration that it was not in default. In June 2007, the federal district court ruled that the company did not breach the indenture, and the trustee appealed the district court's ruling. With the appeal still pending in the appellate court, the parties have now reached an agreement to settle the proceedings.
In exchange for dismissal of Cyberonics' lawsuit and a release from all claims of breach, the company has agreed to repurchase for par value any Note tendered to Cyberonics on December 27, 2011, nine months in advance of the maturity of the Notes. This settlement allows the company to reflect the Notes as a long-term liability at the close of its fiscal year, April 25, 2008. Cyberonics will make no additional changes to the terms of the indenture, apart from the supplemental repurchase right.
"We are pleased to be able to reach an acceptable resolution of this litigation," commented Dan Moore, Cyberonics' President and Chief Executive Officer. "Although we remain confident in our legal position, the improvement to our balance sheet resulting from the settlement provides us with additional fiscal flexibility in our on-going efforts to enhance shareholder value."
About Cyberonics, Inc. and VNS Therapy(TM)
Cyberonics, Inc. is a medical technology company with core expertise in neuromodulation. The company developed and markets the Vagus Nerve Stimulation (VNS) Therapy(TM) System, which is FDA-approved for the treatments of epilepsy and treatment-resistant depression. The VNS Therapy System uses a surgically implanted medical device that delivers electrical pulsed signals to the vagus nerve. Cyberonics markets the VNS Therapy System in selected markets worldwide.
Additional information on Cyberonics and VNS Therapy is available at http://www.cyberonics.com and http://www.vnstherapy.com.
Safe harbor statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward-looking terminology, including "may," "believe," "will," "expect," "anticipate," "estimate," "plan," "intend," and "forecast," or other similar words. Statements contained in this press release are based upon information presently available to us and assumptions that we believe to be reasonable. We are not assuming any duty to update this information should those facts change or should we no longer believe the assumptions to be reasonable. Investors are cautioned that all such statements involve risks and uncertainties, including without limitation, statements concerning reflecting the Notes as a long-term liability on our balance sheet and improving shareholder value. Our actual results may differ materially. Important factors that may cause actual results to differ include, but are not limited to: continued market acceptance of VNS Therapy and sales of our product; the development and satisfactory completion of clinical trials and/or market test and/or regulatory approval of VNS Therapy for the treatment of other indications; satisfactory completion of post-market studies required by the U.S. Food and Drug Administration as a condition of approval for the treatment-resistant depression indication; adverse changes in coverage or reimbursement amounts by third-parties; intellectual property protection and potential infringement claims; maintaining compliance with government regulations and obtaining necessary government approvals for new indications; product liability claims and potential litigation; reliance on single suppliers and manufacturers for certain components; the accuracy of management's estimates of future expenses and sales; the results of the previously disclosed governmental inquiries; the potential identification of material weaknesses in our internal controls over financial reporting; risks and costs associated with such governmental inquiries and any litigation relating thereto or to our stock option grants, procedures, and practices (including the previously disclosed private litigation); uncertainties associated with stockholder litigation; and other risks detailed from time to time in our filings with the Securities and Exchange Commission (SEC). For a detailed discussion of these and other cautionary statements, please refer to our most recent filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended April 27, 2007.
CONTACT: Greg Browne, CFO of Cyberonics, Inc., +1-281-228-7262, fax,
+1-281-218-9332, ir@cyberonics.com
Web site: http://www.cyberonics.com/
