ADTRAN Holdings, Inc. (NASDAQ:ADTN) saw its stock drop 11.1% Tuesday after the company revealed plans to issue $150 million in convertible senior notes due 2030 through a private placement for qualified institutional investors.
The senior, unsecured notes will carry semi-annual interest payments and mature on September 15, 2030, unless redeemed, repurchased, or converted earlier. ADTRAN also expects to offer the initial purchaser an option to acquire up to an additional $22.5 million in notes.
Proceeds will be partly allocated to capped call transactions aimed at reducing potential dilution to common shareholders upon note conversion, with the remainder used to pay down borrowings under the company’s credit agreement dated July 18, 2022.
Noteholders will have the right to convert under specific conditions, with conversions settled at ADTRAN’s discretion through a mix of cash and common stock. The notes may also be redeemable at the company’s option after September 20, 2028, if certain criteria—including the stock price exceeding 130% of the conversion price for a specified period—are met.
ADTRAN will engage in privately negotiated capped call transactions with financial institutions to offset potential dilution and any excess cash obligations. Neither the notes nor the shares issuable upon conversion have been registered under the Securities Act and will be offered under applicable exemptions.
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