Broadwing Corporation (the "Company") entered into a Purchase Agreement (the "Purchase Agreement") dated as of May 9, 2006 with Jefferies & Co., Inc. and CIBC World Markets Corp. (collectively, the "Initial Purchasers"), relating to the private placement of $150,000,000 in aggregate principal amount of the Company's 3.125% Convertible Senior Debentures due 2026 (the "Debentures"). The Purchase Agreement contains customary representations and warranties of the parties and indemnification and contribution provisions whereby the Company, on the one hand, and the Initial Purchasers, on the other hand, have agreed to indemnify each other against certain liabilities.
The Debentures will be convertible into the Company's common stock at an initial fixed conversion rate of 60.2410 shares per $1,000 principal amount of Debentures (equivalent to an initial conversion price of approximately $16.60 per share, which represents a 25% premium based on a closing price of $13.28 per share on May 9, 2006), subject to adjustment in certain circumstances. In addition, the Debentures will accrue interest at a rate of 3.125% per annum payable semi-annually in cash. The net proceeds from the offering, after deducting the Initial Purchasers' discount and the estimated offering expenses payable by the Company, are approximately $145 million assuming no exercise of the Initial Purchasers' additional purchase option. The Company intends to use the net proceeds from the sale of the Debentures for general corporate purposes.
The Debentures will be redeemable at the Company's option on or after May 15, 2013, at a redemption price equal to 100% of the principal amount of the Debentures being redeemed plus accrued and unpaid interest and any liquidated damages, if any. The Debentures will be subject to repurchase at the option of holders on May 15, 2013, May 15, 2016 and May 15, 2021, and upon the occurrence of certain designated events at a repurchase price equal to 100% of the principal amount of the Debentures being repurchased plus accrued and unpaid interest and any liquidated damages, if any.
