News: Suppliers
14 May 2020
Veeco prices private offering of $125m of 3.75% convertible senior notes
Epitaxial deposition and process equipment maker Veeco Instruments Inc of Plainview, NY, USA has announced the pricing of a private offering of $125m of 3.75% convertible senior notes due 2027, to be offered to qualified institutional buyers. Veeco also granted the initial purchasers of the notes a 30-day option to purchase up to an additional $18.75m of the notes. The closing of the offering is expected to occur on 18 May, subject to customary closing conditions.
Veeco estimates that the net proceeds will be about $121.9m (or $140.3m if the initial purchasers exercise their option in full), after deducting fees and expenses payable by Veeco.
Of the net proceeds, Veeco intends to use about $10.3m to pay the cost of capped call transactions, and $81.2m to repurchase and retire $88.3m of its outstanding 2.70% convertible senior notes due 2023 in separate, privately negotiated transactions effected by one or more of the initial purchasers or their affiliates concurrently with the pricing of the notes. Veeco intends to use the remainder for general corporate purposes.
If the initial purchasers exercise their option to purchase additional notes, Veeco intends to use thosee net proceeds to enter into additional capped call transactions with the capped call counterparties, and to use the remainder for general corporate purposes.
Veeco expects that holders that sell their 2023 notes may enter into or unwind various derivatives with respect to the firm’s common stock and/or purchase or sell shares of common stock in the market to hedge their exposure in connection with these transactions. In particular, Veeco expects some holders to employ a convertible arbitrage strategy with respect to the 2023 notes and have a short position with respect to Veeco’s common stock that they would close, through purchases of the stock, in connection with Veeco’s repurchase of their 2023 notes. If any such activity occurs, it could increase (or reduce the size of any decrease in) the market price of Veeco’s common stock or the notes at that time.
The notes will be Veeco’s general senior unsecured obligations. They will bear interest at a rate of 3.75% per year, payable semi-annually in arrears on 1 June and 1 December of each year, beginning on 1 December 2020. The notes will mature on 1 June 2027, unless earlier redeemed, repurchased or converted. The initial conversion rate for the notes is 71.5372 shares of Veeco’s common stock per $1000 of notes (equivalent to an initial conversion price of about $13.98 per share of Veeco common stock). Prior to the close of business on the business day immediately preceding 1 October 2026, the notes will be convertible only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Veeco will settle any conversions of the notes by paying or delivering cash, shares of its common stock or a combination of cash and shares of its common stock, at Veeco’s election.
In connection with the pricing of the notes, Veeco entered into capped call transactions with one or more of the initial purchasers and/or their affiliates and/or other financial institutions. The capped call transactions are expected generally to reduce potential dilution to Veeco’s common stock upon any conversion of the notes and/or offset any cash payments that the firm is required to make in excess of the principal amount of the converted notes in the event that the market price of Veeco’s common stock is greater than the strike price of the capped call transactions (which initially corresponds to the initial conversion price of the notes and is subject to certain adjustments under the terms of the capped call transaction), with such reduction and/or offset subject to a cap based on the cap price of the capped call transactions. The cap price of the capped call transactions is initially about $18.46 per share and is subject to certain adjustments under the terms of the capped call transaction. If the initial purchasers exercise their option to purchase additional notes, Veeco intends to enter into additional capped call transactions with the capped call counterparties.
Veeco announces proposed private offering of $150m of convertible senior notes
