Lumentum Prices $1.1 Bln Convertible Notes Due 2032; Enters Capped Call Transactions

Lumentum Holdings

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(RTTNews) - Lumentum Holdings Inc. (LITE), a manufacturer of innovative optical and photonic products, on Thursday announced that it has priced $1.1 billion aggregate principal amount of convertible senior notes due 2032 in a private placement.

The notes will be senior unsecured obligations, bearing interest at 0.375% per year, payable semi-annually on March 15 and September 15, beginning March 15, 2026. They will mature on March 15, 2032, unless earlier converted, redeemed, or repurchased.

The initial conversion rate is 5.3257 shares per $1,000 principal amount of notes, or equivalent to about $187.77 per share, representing a premium of roughly 40% over the last reported sale price of $134.12 on September 3.

The company said it has granted initial purchasers a 13-day option to buy up to an additional $165 million of notes. Settlement is expected on September 8. Net proceeds are estimated at about $1.09 billion, or $1.25 billion if the option is fully exercised.

Of the proceeds, about $88.7 million will be used to fund capped call transactions. The company also intends to repurchase roughly $581.1 million of its 0.50% convertible senior notes due 2026, including accrued and unpaid interest, using about $843.8 million of the proceeds in concurrent privately negotiated transactions.

The remainder will be used for general corporate purposes, which may include debt repayment, capital expenditures, working capital, and potential acquisitions.

The notes may be redeemed for cash, at the company's option, on or after March 20, 2029, if the stock price is at least 130% of the conversion price for a specified period.

Further, the company entered into capped call transactions tied to its $1.1 billion notes, covering shares underlying the notes to reduce dilution, with a cap price of $268.24, a 100% premium to the September 3 close.

In the pre-market trading, Lumentum is 1.80% lesser at $131.70 on the Nasdaq.