SAN FRANCISCO—Despite protests from billionaire financier Carl Icahn and others, EDA vendor Mentor Graphics Corp. said Thursday (May 31) it will move ahead with a plan to offer up $253 million in convertible bonds through private placement.
Mentor said its board also rejected a loan proposal from Icahn that was received March 29, after the company priced its convertible bond offering. The board said Icahn's proposal "lacked detail on important terms" and carried a higher interest rate.
Earlier this week, Icahn lashed out at Mentor's board in a public letter for rejecting his $1.9 billion takeover offer and for proposing the bond offering. Icahn, who owns close to 15 percent of Mentor's outstanding shares, has been pushing Mentor's board to sell the company and has initiated a proxy fight over board seats.
In a letter to Mentor's board dated Thursday, Douglas Taylor, CEO of Casablanca Capital, called the convertible bond offering "an ill-timed and ill-conceived action that serves to dilute shareholders." Casablanca said Mentor has underperformed for years and called the board's rejection of Icahn's takeover bid a detriment to shareholders.
Taylor said Casablanca, which owns about 5 percent of Mentor's shares, would support Icahn's slate of nominees to Mentor's board. "Time is up for Mentor’s failing leadership," Taylor said
Mentor said Thursday that the convertible bond offering would allow it to repay higher interest debt, reduce stockholder dilution and provide extended time for repayment, among other benefits.