euNetworks Group, the operator of all-optical computer networks linking Germany, The Netherlands, UK, France and Belgium, is proposing to undertake a renounceable partially underwritten rights issue of up to $95.8 million worth of zero-coupon convertible bonds due 2013 in the denomination of $1 each, on the basis of one convertible bond for every 100 shares held by shareholders.

The proposed issue price of each convertible bond is 97% of the principal amount of the convertible bonds or 97 cents for each convertible bond.

Based on the minimum issue size, the gross proceeds from the rights issue will be $83.9 million. Based on the maximum issue size, the gross proceeds from the rights issue will be $92.9 million.

After deducting expenses associated with the rights Issue, the net proceeds should be between $80.8 million and $89.8 million.

euNetworks intends to use up to $42 million of the proceeds of the rights issue for the repayment of the 3% convertible bonds due 2012 issued by the company on Oct 25, 2007. At present, €17.5 million ($35.2 million) in principal amount of the 2012 convertible bonds remain outstanding.

Holders of the 2012 convertible bonds have the right to convert the 2012 convertible bonds into new shares at a conversion price of S$0.120862 per share at any time prior to maturity.

Under the terms of the 2012 convertible bonds, the bondholders have a right to require the company to redeem all or some of their 2012 convertible bonds on Oct 25, 2010 at 116.23% of the unpaid principal amount as at 25 October 2010, together with accrued and unpaid interest.

Based on the outstanding principal amount of the 2012 convertible bonds as at the date of this announcement, the company may be expected to pay up to €20.3 million to bondholders in the event all the outstanding 2012 convertible bonds are redeemed.

The company also intends to use up to $40 million of the proceeds of the rights issue for capital expenditure by the company and its subsidiaries. The balance of the net proceeds will be deployed as working capital of the group.

CIMB Bank Berhad, Singapore Branch, has been appointed as the manager to manage the issue of the convertible bonds under the rights issue and CIMB-GK Securities has been appointed the underwriter of the rights issue.