Holders of convertible notes claimed, through their trustee, that the acquisition of the note-issuing company triggered their right, under the trust indenture, to receive cash or stock if and when a "Public Acquirer Change of Control" took place.  "Public Acquirer", according to the indenture, meant a person that "has a class of common stock traded on a United States national securities exchange".  Did the purchase of the note issuer by a Luxembourg firm that listed only its American Depository Shares on a U.S. national securities exchange (the NYSE) count as a Public Acquirer Change of Control?

The Second Circuit today said no.  ADSs represented a claim on the buyer's common stock.  But they differed from common stock.  The indenture defined "Capital Stock" as including ADSs but nowhere equated "common stock" with ADSs, the court noted.  It explained:

The parties could easily have included in the Indenture a definition of common stock in general with a parenthetical phrase expressly including ADSs, such as the parenthetical in the definition of "Capital Stock"; or they could have included such a parenthetical after "common stock" in the "a class of common stock traded on a United States national securities exchange" clause of the Public Acquirer definition.  They did neither.

Law Debenture Trust Co. of New York v. Maverick Tube Corp., No. 08-5668-cv, slip op. at 19 (2d Cir. Feb. 19, 2010).