Brooks Note Holders Look to Cash In

Staff Reporter -- Electronic News, 5/18/2006

Brooks Automation Inc. felt more of the ramifications of its delayed quarterly report filing this week as it received notification that it was in breach of its obligations to certain note holders.

On May 15, holders of more than 25 percent of the aggregate outstanding principal amount of its 4.75 percent convertible subordinated notes, due 2008, made the notification to Brooks. The notification said that an event of default would occur if Brooks failed to remedy the default within 60 days, opening the door for an acceleration of the maturity of the notes.

As of March 31, Brooks held approximately $373 million of cash and marketable securities, and the notes currently have an aggregate outstanding principal amount of $175 million.

In a statement issued this week Brooks said it believes that after any required repayment of the notes, its existing resources will be adequate to fund its currently planned working capital and expenditure requirements for both the long and short term.

Last week Brooks said that it received notice from the Nasdaq, saying the delayed filing of its 10-Q quarterly report with the U.S. Securities and Exchange Commission put it in violation of the stock exchange’s rules. To avoid delisting, Nasdaq told the company, it needed to request a hearing before May 23, which the company said it intends to do.

Brooks delayed the filing of its 10-Q because it plans to restate financial statements pending an internal investigation of its stock options grants.

A number of companies have been investigating their stock option programs in the wake of a March 18 Wall Street Journal article published indicating potential options backdating activity at several companies, including Mercury Interactive Corp, Brooks Automation Inc. and Vitesse Semiconductor Corp. Vitesse this week fired its CEO, CFO and an executive VP in relation to its findings in its own internal investigation.