Adtran Holdings, Inc. (NASDAQ: ADTN) recently announced its intention to offer $150,000,000 aggregate principal amount of convertible senior notes due 2030 in a private offering to qualified institutional buyers. The company also expects to grant the initial purchaser of the notes an option to purchase up to an additional $22,500,000 principal amount of notes.
The notes will be senior, unsecured obligations of the company, and will accrue interest payable semi-annually in arrears, maturing on September 15, 2030. Notably, noteholders will have the right to convert their notes in certain circumstances and during specified periods. The company intends to use a portion of the net proceeds from the offering to fund the cost of entering into capped call transactions, and the remainder to repay a portion of outstanding borrowings under its credit agreement dated July 18, 2022.
The company is expected to enter into privately negotiated capped call transactions with the initial purchaser or one of its affiliates and/or certain other financial institutions. The capped call transactions are generally expected to reduce the potential dilution to the company’s common stock upon any conversion of the notes and/or offset any potential cash payments the company is required to make in excess of the principal amount of converted notes.
In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to the company’s common stock and/or purchase shares of the company’s common stock concurrently with or shortly after the pricing of the notes.
The offer and sale of the notes and any shares of common stock issuable upon conversion of the notes have not been registered under the securities act or any other securities laws. Adtran Holdings, Inc. is the parent company of Adtran, Inc., a leading global provider of open, disaggregated networking and communications solutions.
This move by Adtran Holdings, Inc. reflects the company's strategy to leverage the current market conditions and investor interest in financing activities. It also underscores the company’s focus on optimizing its capital structure and addressing its funding needs. The market has reacted to these announcements by moving the company's shares -0.85% to a price of $8.785. Check out the company's full 8-K submission here.
