Rambus Denies Bond Default
Rambus (RMBS) is in a spat with certain of its bondholders, which puts the company at risk of repaying $160 million in notes within the next month.
In a Security and Exchange Commission filing late Thursday, Rambus said that it received a notice from U.S. Bank National Association contending that it had defaulted on the terms of its zero-coupon convertible notes due 2010. U.S. Bank serves as the trustee for the bonds.
Rambus said it does not believe that it is in default and disputed the amount of time that U.S. Bank claimed remained on the clock before any obligation to accelerate payment of the bonds occurred.
Shares of Rambus slipped 1.8%, or 34 cents, to $18.70 in extended trading.Rambus is not the first company to be hit with such a claim in the wake of the stock option-backdating controversy. As companies have launched internal investigations into their past stock option-accounting practices, many have had to delay filing their quarterly and annual reports with the SEC. This has provided grounds for bondholders to claim that the companies have violated the terms of their bonds, which often require financial reports to be filed to both the SEC and the trustee at regular intervals. In August, Vitesse Semiconductor (VTSS) said it had received a similar notice from U.S. Bank seeking to accelerate payment of $96.7 million in convertible subordinated debentures due 2024.
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