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Solectron Corp. made two recent trips to the stock market and raised $1.1 billion through a complex financial tool known as an adjustable conversation rate equity security. Milpitas, Calif.-based Solectron is the first technology company to raise money using the financial instrument, which could also be called a mandatory convertible debt security, said Thomas Ivey, a partner at New York-based Skadden, Arps, Slate, Meagher & Flom. Skadden and investment bank Goldman, Sachs & Co. developed the security about two years ago. The instrument enables companies to raise large amounts of cash up front from investors who promise to buy stock in three years. To assure the company that the stock purchase will happen, investors buy a five-year bond and pledge it to the company. In return, the company pays the investors quarterly interest payments on the bond. Hedge funds are the primary buyers of the security, which consists of the two components — the cash to the company and the purchase of the five-year bond. “It’s a very complex, complicated instrument but both teams pulled together and the company was really great in being open-minded about the security,” Ivey said. Ivey represented Goldman in the deal, which initially raised $1 billion in late December and another $100 million in a final closing Jan. 8. His team included New York partners John Osborn, a derivatives specialist, and Charles Morgan, a tax lawyer. Los Angeles corporate partner Nicholas Saggese pitched in along with associates Rick Madden from L.A. and Nicole Morath in Palo Alto, Calif. Solectron’s legal team comprised Steven Bochner and Daniel Weiser, both of whom are partners at Palo Alto-based Wilson Sonsini Goodrich & Rosati.

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