13 November 2020
Veeco retiring $125m of 2.70% convertible senior notes due 2023
Epitaxial deposition and process equipment maker Veeco Instruments Inc of Plainview, NY, USA has entered into a privately negotiated exchange agreement to retire $125m of its outstanding 2.70% convertible senior notes due 2023 in exchange for the issuance of $132.5m of its new 3.50% convertible senior exchange notes due 2025 and a cash payment to the holder of $1.1m in respect of accrued and unpaid interest on the original notes to be exchanged. Following the exchange transaction, $131.7m of the original notes will remain outstanding, with the terms unchanged.
The new notes will mature on 15 January 2025 and pay interest semi-annually at 3.50% per year. They have an initial conversion rate of 41.6667 shares of Veeco’s common stock per $1000 of new notes (equivalent to a conversion price of about $24.00 per share), subject to adjustment in certain events. The initial conversion price represents an approximately 58.6% premium over the closing sale price of Veeco’s common stock on 11 November. Conversions of the new notes will be settled in cash, shares of common stock or a combination thereof, at Veeco’s election.
The holder of the new notes may convert all or a portion of its notes at its option at any time prior to the close of business on the business day immediately preceding 15 October 2024, only upon the satisfaction of certain conditions and during certain time periods. On or after 15 October 2024 until the close of business on the second scheduled trading day immediately preceding 15 January 2025, the holder may convert its new notes at any time, without condition.
Veeco may be required to repurchase for cash the new notes upon the occurrence of a fundamental change (as defined in the indenture governing the new notes) at a repurchase price equal to the principal amount thereof plus accrued and unpaid interest to, but excluding, the repurchase date. In addition, upon the occurrence of certain corporate events, the conversion rate on the new notes will increase.
The new notes will not be redeemable by Veeco prior to 15 January 2023. On or after 15 January 2023, Veeco may redeem for cash all or any portion of the new notes if the last reported sale price of Veeco’s common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the trading day of such period) ending on, and including, the trading day immediately preceding the date on which Veeco provides notice of redemption at a redemption price equal to 100% of the new notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date (subject to certain limited exceptions).
Veeco anticipates that the closing of the exchange transaction will occur on or about 17 November, subject to customary closing conditions.