CEVA Group Plc Announces Commencement of Exchange Offers and Consent Solicitations in Connection with Recapitalization

• Company Has Commenced Private Exchange Offers and Consent Solicitations for Certain Outstanding Debt Securities Pursuant to Previously Announced Agreement
• Transaction Strengthens Balance Sheet by Eliminating Over €1.2 Billion of Consolidated Net Debt
• Reduces Annual Cash Interest Cost by Over €135 Million; Approx. 50%
• Provides €205 Million of Committed Capital Infusion for Investment in Company’s Business Plan.

Hoofddorp, the Netherlands, 4 April, 2013 – CEVA Group Plc (“CEVA” or the “Company”), one of the world’s leading non-asset based supply chain management companies, announced that it has commenced private exchange offers (the “Exchange Offers”) and consent solicitations (the “Consent Solicitations”) for certain outstanding debt securities in connection with its previously announced financial recapitalization plan that will reduce substantially CEVA’s overall debt and interest costs, as well as increase liquidity and strengthen its capital structure (the “Recapitalization or Recap”).  The Recap will enable CEVA to better serve its customers, accelerate its growth throughout the world and fund the development of new supply chain products and services.  Assuming successful completion of the Recapitalization, the Company will reduce its consolidated net debt by more than €1.2 billion, reduce its annual cash interest expense by over €135 million, or approximately 50%, and will receive a capital infusion of at least €205 million for investment in its business plan.

As previously reported on 3 April, CEVA and parties representing approximately 83% of the aggregate outstanding principal amount of the 12.75% Senior Notes due 2020 (the “Senior Unsecured Notes”), the 12% Second-Priority Senior Secured Notes due 2014 (the “Unexchanged  Notes”) and $113 million Senior Unsecured Bridge Loan (the “Bridge Loan,” and, together with the Senior Unsecured Notes and the Unexchanged Notes, the “Senior Unsecured Debt”) and 69% of the outstanding principal amount of the 11.5% Junior Priority Secured Notes due 2018 (the “Second Lien Notes”) entered into a restructuring support agreement (the “RSA”) in connection with the Recapitalization.  The RSA provides, subject to the satisfaction of certain conditions, for commitments to invest more than €205 million by three parties, consisting of (i) investment funds affiliated with Apollo Global Management, LLC (NYSE: APO) that are creditors of CEVA (“Apollo”), (ii) certain funds advised by Capital Research and Management Company that are creditors of CEVA (“CapRe”) and (iii) the Company’s largest institutional investor.

In connection with the Recapitalization, CEVA and CEVA Holdings LLC (“Holdings”), which will be the ultimate parent company of CEVA upon consummation of the Recap, have commenced the Exchange Offers to exchange, among other things:

• New series A-2 convertible preferred equity interests to be issued by Holdings (“Series A-2 Preferred Shares”) and new common equity interests to be issued by Holdings (“Holdings Common Shares”) for the Second Lien Notes
• Holdings Common Shares for the Senior Unsecured Debt.

The terms of the Exchange Offers are described more fully in a Confidential Offering Memorandum, Consent Solicitation and Disclosure Statement (the “Offering Memorandum”), dated as of 3 April, 2013, prepared in connection with the Recapitalization.  The Recapitalization also contemplates the restructuring of debt obligations of CEVA’s current parent company, CIL Limited (formerly known as CEVA Investments Limited, “CIL”), providing the holders of certain debt instruments issued by CIL (the “CIL PIK Instruments”) the opportunity to exchange such CIL PIK Instruments for Holdings Common Shares.

Pursuant to the Recapitalization, Holdings is also offering holders of Second Lien Notes, Senior Unsecured Debt and CIL PIK Instruments the opportunity to subscribe for rights (“Subscription Rights”) to participate in an equity rights offering (the “Rights Offering”) for new series A-1 convertible preferred equity interests to be issued by Holdings (the “Series A-1 Preferred Shares”).  Apollo and CapRe have agreed to backstop  a portion of the Rights Offering pursuant to the terms of a backstop agreement executed by the parties on 3 April, 2013 (the “Backstop Agreement”), as further described in the Offering Memorandum.  Additionally, the Company’s largest institutional investor has committed to a debt financing with the Company as described more fully in the Offering Memorandum and pursuant to a financing commitment agreement between such institutional investor and the Company (the “Financing Commitment Agreement”).

Under the terms of the Exchange Offers, for each $1,000 principal amount of Second Lien Notes validly tendered, and not validly withdrawn, by eligible holders in the exchange offer relating to the Second Lien Notes at or prior to midnight, New York City time, on 30 April, 2013, unless extended (the “Expiration Time”), such holders will receive 0.4855082 Series A-2 Preferred Shares and 0.1742813 Holdings Common Shares.  For each $1,000 principal amount of Senior Unsecured Notes validly tendered, and not validly withdrawn, by eligible holders in the exchange offer relating to the Senior Unsecured Notes at or prior to the Expiration Time, such holders will receive 0.3644632 Holdings Common Shares.  For each €1,000 principal amount of Unexchanged Notes validly tendered, and not validly withdrawn, by eligible holders in the exchange offer relating to the Unexchanged Notes at or prior to the Expiration Time, such holders will receive 0.4394916 Holdings Common Shares.  For each $1,000 principal amount of Bridge Loan validly tendered, and not validly withdrawn, by eligible holders in the exchange offer relating to the Bridge Loan at or prior to the Expiration Time, such holders will receive 0.3429161 Holdings Common Shares.  In addition, each eligible holder of Second Lien Notes, Senior Unsecured Debt and CIL PIK Instruments will receive Subscription Rights to subscribe for a number of shares of Series A-1 Preferred Shares in the Rights Offering, on a pro rata basis, in direct correlation to their entitlement to receive Holdings Common Shares in the Exchange Offers on terms set forth in the Offering Memorandum, after taking into account conversion of the Series A-2 Preferred Shares.

In conjunction with the Exchange Offers, CEVA is also soliciting consents (the “Consent Solicitations”) from eligible holders of at least a majority of the Second Lien Notes and the Senior Unsecured Notes to the adoption of proposed amendments (the “Proposed Amendments”) to the indentures governing the Second Lien Notes and the Senior Unsecured Notes, as applicable, (i) to eliminate substantially all of the restrictive covenants and certain events of default and related provisions contained therein, (ii) to permit CEVA and its affiliates who are holders of Second Lien Notes and Senior Unsecured Notes to vote on any consents, amendments or waivers to the applicable indentures and (iii) with respect to the indenture governing the Second Lien Notes, to provide for the release of all of the liens on the collateral securing the Second Lien Notes, including by terminating or amending, as applicable, the related security documents.

If the Exchange Offers are consummated, eligible holders of Second Lien Notes and Senior Unsecured Notes will receive a consent fee or early tender fee of 0.05 Holdings Common Shares, for each $1,000 principal amount of notes validly tendered, and not validly withdrawn, at or prior to 5:00 p.m., New York City time, on 16 April, 2013 (the “Consent Time”).  Similarly, if the Exchange Offers are consummated, eligible holders of the Company’s Unexchanged Notes and Bridge Loan will receive an early tender fee of 0.06405 and 0.05 Holdings Common Shares, respectively, for each €1,000 principal amount of Unexchanged Notes or $1,000 principal amount of Bridge Loan validly tendered, and not validly withdrawn, at or prior to the Consent Time.  Tendered notes and other debt may not be withdrawn after the Consent Time.

The closing of the Exchange Offers is conditioned upon, among other things, 98% of the aggregate principal amount of each of the Second Lien Notes and Senior Unsecured Debt being validly tendered and not withdrawn in the Exchange Offers and the consummation of the Rights Offering on the terms set forth in the Backstop Agreement.  In addition, in order to consummate the Exchange Offers, CEVA is seeking certain concessions from certain other creditors, including its asset based lenders and secured credit facility lenders.

The Company has developed an alternative path to ensure the Recapitalization is completed on a timely basis.  Concurrently with the solicitation of the Exchange Offers, CEVA is soliciting votes for acceptance of a pre-packaged plan of reorganization under applicable U.S. law and irrevocable undertakings to vote in favor of a scheme of arrangement under applicable English law, each of which requires a lower voting threshold than the Exchange Offers.  CEVA intends to commence these alternative court proceedings in the U.S. and U.K. if it does not receive tenders from 98% of holders of each of the Second Lien Notes and the Senior Unsecured Debt or does not satisfy other conditions to consummation of the Exchange Offers, including obtaining concessions from its asset based lenders and secured credit facility lenders. The terms of the U.S. pre-packaged plan of reorganization and U.K. scheme of arrangement would provide less favorable treatment to holders of the Second Lien Notes and Senior Unsecured Debt than in the Exchange Offers, but would continue to provide for payment in full of all claims of the Company’s vendors and other unsecured creditors.  As noted above, the Expiration Time for the Exchange Offers is midnight, New York City time, on 30 April, 2013, unless extended.  The deadline for casting votes on the U.S. pre-packaged plan of reorganization is the same date.

None of CEVA, Holdings or any other person makes any recommendation as to whether holders should tender their securities in the Exchange Offers or provide the consents to the Proposed Amendments in the Consent Solicitations, and no one has been authorized to make such a recommendation.  Holders of securities should read carefully the Offering Memorandum before making any decision with respect to the Restructuring.  In addition, holders must make their own decisions as to whether to tender their Securities in the Exchange Offers and provide the related consents in the Consent Solicitations, and if they so decide, the principal amount of the securities to tender.

The new securities being offered in the Exchange Offers have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act.

The Exchange Offers are being made in the United States only to holders of securities who are both “qualified institutional buyers” or “accredited investors” and “U.S. persons” and outside the United States only to persons other than “U.S. persons” who are “non-U.S. qualified offerees” (in each case, as such terms are used in the letter of eligibility).  The Exchange Offers are made only by, and pursuant to, the terms set forth in the Offering Memorandum.  The Exchange Offers are subject to certain significant conditions.  The complete terms and conditions of the Exchange Offers are set forth in the Offering Memorandum and other documents relating to the Restructuring which will be distributed to eligible holders of Securities.  CEVA and Holdings have the right to amend, terminate or withdraw the Exchange Offers and Consent Solicitation, at any time and for any reason, including if any of the conditions to the Exchange Offers is not satisfied.

Documents relating to the Exchange Offers, including the Offering Memorandum will only be distributed to holders of securities who complete and return a letter of eligibility confirming that they are within the category of eligible holders for the Exchange Offers.  Holders of securities who desire a copy of the eligibility letter should contact Garden City Group, the exchange agent for the Exchange Offers, at (855) 454-1733.

In addition, CEVA has prepared a report for its bond investors containing certain additional information about its preliminary unaudited results for 2012, including the preliminary unaudited financial statements for 2012, as well as recent developments and other information about CEVA that is contained in the Offering Memorandum but not in any prior announcements or reports posted on the website.  All information in the report is also contained in the Offering Memorandum; however, bondholders or prospective bond investors who would like to review this report should visit the following website: http://www.cevalogistics.com/en-US/Pages/Investors%20Login.aspx.

For more information please contact:

Mike Darcy
+31 622 482604
[email protected]

CEVA Making Business Flow

CEVA, one of the world’s leading non-asset based supply chain management companies, designs and implements industry leading solutions for large and medium-size national and multinational companies.  Approximately 50,000 employees are dedicated to delivering effective and robust supply chain solutions across a variety of sectors and CEVA applies its operational expertise to provide best-in-class services across its integrated network, with a presence in over 160 countries.  For the year ending 31 December, 2012, the Group reported revenues of €7.2 billion.  For more information, please visit www.cevalogistics.com

Cautionary Statement

This news release is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offering, solicitation or sale would be unlawful.  The offers to exchange the Securities are only being made pursuant to the Offering Memorandum that CEVA is distributing to eligible holders of the Securities.  The Exchange Offers are not being made to holders of the Securities in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction.

This news release is directed only at persons (i) who are outside the United Kingdom or (ii) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) or (iii) who fall within Article 49(2)(a) to (d) of the Order or (iv) to whom this press release may otherwise be directed without contravention of section 21 of the Financial Services and Markets Act 2000 (all such persons together being referred to as “Relevant Persons”).  This news release is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons.  Any investment or investment activity to which this press release relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.

Safe Harbor Statement:

This news release may contain forward-looking statements. These statements include, but are not limited to, discussions regarding industry outlook, the Company’s expectations regarding the performance of its business, its liquidity and capital resources, its guidance for 2012 and beyond, and the other non-historical statements. These statements can be identified by the use of words such as “believes” “anticipates,” “expects,” “intends,” “plans,” “continues,” “estimates,” “predicts,” “projects,” “forecasts,” and similar expressions. All forward-looking statements are based on management’s current expectations and beliefs only as of the date of this press release and, in addition to the assumptions specifically mentioned in the above paragraphs, there are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including the effect of local and national economic, credit and capital market conditions, a downturn in the industries in which we operate (including the automotive industry and the airfreight business), risks associated with the Company’s global operations, fluctuations and increases in fuel prices, the Company’s substantial indebtedness, restrictions contained in its debt agreements and risks that it will be unable to compete effectively. Further information concerning the Company and its business, including factors that potentially could materially affect the Company’s financial results, is contained in the Company’s annual and quarterly reports, available on the Company’s website, which investors are strongly encouraged to review. Should one or more of these risks or uncertainties materialize or the consequences of such a development worsen, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. CEVA disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.