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13 May 2020

Veeco announces proposed private offering of $150m of convertible senior notes

Epitaxial deposition and process equipment maker Veeco Instruments Inc of Plainview, NY, USA intends to offer to qualified institutional buyers (subject to market and other conditions) $150m of convertible senior notes due 2027 in a private offering. Veeco also expects to grant the initial purchasers a 30-day option to purchase up to an additional $22.5m of the notes.

Veeco intends to use part of the net proceeds to pay the cost of capped call transactions, and the remainder to repurchase and retire a portion 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.

To the extent that Veeco is unable to repurchase the anticipated amount of its outstanding 2023 notes with the net proceeds, Veeco intends to use any remaining net proceeds for general corporate purposes. If the initial purchasers exercise their option to purchase additional notes, Veeco intends to use part of those net proceeds to enter into additional capped call transactions with the capped call counterparties, and to use the remainder for the repurchase or other retirement of additional outstanding 2023 notes and/or other 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 that many holders 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 senior unsecured obligations. They will mature on 1 June 2027, unless earlier redeemed, repurchased or converted. Veeco may not redeem the notes prior to 6 June 2024. On or after 6 June 2024, Veeco may redeem for cash all or a portion of the notes if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect on each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending on, and including, the trading day immediately preceding the date on which Veeco provides notice of redemption. 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. The interest rate, initial conversion rate, and other terms of the notes will be determined by negotiations between Veeco and the initial purchasers of the notes.

In connection with the offering of the notes, Veeco expects to enter into capped call transactions with one or more of the initial purchasers and/or their affiliates and/or other financial institutions. Veeco expects that the strike price of the capped call transactions will initially represent a premium of about 75% over the last reported sale price of the common stock on the pricing date of the offering. 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 the stock is greater than the strike price of the capped call transactions (which will initially correspond to the initial conversion price of the notes and is subject to certain adjustments under the terms of the capped call transactions), with such reduction and/or offset subject to a cap based on the cap price of the capped call transactions. 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.

Tags: Veeco

Visit: www.veeco.com

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