Cray goes back to the debt sale barn, loads up for Christmas [CORRECTED]

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With all the very bad news in the economy these days, it can be hard to remember that every crisis is someone’s opportunity.

Lately, that someone has been Cray. Back in October Cray announced that they had repurchased a total of $40.2M in debt in two transactions at the discounted prices of 92% and 91.5% of par value, plus interest [CORRECTED: this paragraph was corrected to reflect both debt purchases].

What does this mean to Joe the HPC guy? It means that Cray got to borrow $100 and only pay back $92, plus whatever interest had accrued. Pretty sweet deal, made possible by banks willing to deal hard for fast cash to cover tough times on other parts of their business. It was also a signal that Cray had real confidence in their business position, cash on hand, and in their ability to borrow in the future if needed.

As the financial problems have deepened over the past month or so, it seems that banks have gotten even hungrier for cash. Cray announced in a Form 8K filed with the SEC today that they’ve bought another bolus of debt back at a steeper discount

On December 10, 2008, we repurchased $6,073,000 in principal amount of our 3.0% Convertible Senior Subordinated Notes due in 2024 (the “Notes”) at a price equal to 88.75% of par value plus accrued interest and commissions.

After this repurchase the company has roughly $34M in convertible notes outstanding, down from a total of $80M at the beginning of Q4.

Go team rocket! This, along with the raft of Form 4’s filed in the past month are strong positive signals in an industry going through a pretty tough business cycle.

(Nota bene: a Form 4 signals stock buying by company insiders, and there have been 8 filed since November 12.)


  1. So what is the big differentiating factor when you weigh the winners vs. the losers…the opportunists vs. the fatalists…? A few years back, many people in this community were ready to count Cray out of the game. Sad, but true. I have no vested interest in the company other than my respect for the name, the legacy, and the management. And that my friends – is the difference. Very, very smart management – once again building a reputation as a company people “want” to do business with. Smart decisions during tough times. Not only weathering the storm, but riding it to the crest of each new wave, like a champion surfer. Cray is once again a powerful symbol of what this community is all about. Bravo.