Applied Optoelectronics, Inc. (NASDAQ: AAOI) has announced its proposed private exchange offer for its 5.25% Convertible Senior Notes due 2026 (the "2026 Notes") and a concurrent registered direct offering. The company expects to enter into transactions with holders of its 2026 Notes to exchange approximately $80 million principal amount of the 2026 Notes for aggregate consideration consisting of a combination of convertible senior notes due 2030 (the "2030 Notes"), shares of the company's common stock, and cash representing accrued interest on the 2026 Notes and the value of fractional shares.
The final terms for the exchanges will be determined at the time of pricing. The 2030 Notes will be the company's senior, unsecured obligations and will be equal in right of payment with the existing and future senior, unsecured indebtedness, senior in right of payment to existing and future indebtedness that is expressly subordinated to the 2030 Notes, and effectively subordinated to existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness.
Following the completion of the exchanges, the company may engage in additional exchanges or repurchase, induce conversions of, or exercise its right to redeem the 2026 Notes. Holders of the 2026 Notes that participate in any of these exchanges, repurchases, or induced conversions may purchase or sell shares of the company's common stock in the open market to unwind any hedge positions they may have with respect to the 2026 Notes or the company's common stock or to hedge their exposure in connection with these transactions.
Concurrently with the exchanges, Applied Optoelectronics, Inc. announced its intention to commence an offering of shares of its common stock in a registered direct offering. The company intends to use the net proceeds, if any, from the registered direct offering for general corporate purposes, which may include capital expenditures, working capital, and funding acquisitions of businesses, technologies, or product lines that complement its current business.
The exchanges and registered direct offering are expected to close concurrently on or about December 23, 2024, subject to customary closing conditions.
Raymond James & Associates, Inc. is acting as the company's exclusive financial advisor in connection with the exchanges, while Raymond James & Associates, Inc. is acting as the sole placement agent in connection with the registered direct offering. Haynes Boone LLP is acting as the legal advisor to Applied Optoelectronics, Inc., and Mayer Brown LLP is acting as the legal advisor to Raymond James & Associates, Inc., in connection with the exchanges and the registered direct offering.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Following these announcements, the company's shares moved 15.2%, and are now trading at a price of $37.32. Check out the company's full 8-K submission here.
