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16 August 2013

JDSU announces pricing of $575m of senior convertible notes

Optoelectronic chip and module maker JDSU of Milpitas, CA, USA has priced $575m aggregate principal amount of its 0.625% senior convertible debentures due 2033 in a private offering to qualified institutional buyers. JDSU has granted the initial purchasers a 30-day option to purchase up to an additional $75m principal amount of the notes. The sale of the notes is expected to close on 21 August, subject to customary closing conditions.

When issued:

  • The notes will represent senior unsecured obligations of JDSU and pay interest semi-annually in arrears on 15 February and 15 August of each year at a rate of 0.625% per annum;
  • The notes will mature on 15 August 2033, unless earlier converted, redeemed or repurchased;
  • The notes will be convertible at the option of holders in certain circumstances and during certain periods into cash up to their principal amount, and into cash, shares of JDSU common stock or a combination of cash and JDSU common stock at JDSU’s election for the conversion value above the principal amount. The initial conversion rate is 53.1067 shares of JDSU common stock per $1000 principal amount of the notes, which is equivalent to an initial conversion price of about $18.83 per share and will be subject to customary anti-dilution adjustments. This represents a conversion premium of about 40% over the closing price of $13.45 of JDSU’s common stock on 15 August;
  • JDSU has the right to redeem the notes beginning 20 August 2018. Holders of the notes may require JDSU to repurchase the notes on 15 August 2018, 15 August 2023 and 15 August 2028.

JDSU estimates that (after deducting the initial purchasers’ discounts and estimated offering expenses) net proceeds from the offering will be about $563m, or $636m if the initial purchasers exercise their option to purchase additional notes in full. JDSU is using $100m of the net proceeds from the offering to repurchase shares of its outstanding common stock in privately negotiated transactions, which may be effected through one or more of the initial purchasers of the notes or their respective affiliates, concurrently with the offering. The remaining net proceeds will be used for general corporate purposes, including potential strategic transactions.

Contingent and effective upon the closing of the sale of the notes, JDSU is terminating its existing $250m revolving credit facility, which currently has no amounts outstanding.

Tags: JDSU


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