Morning Commentary: Veeco convertible notes price overnight, soar on trading debut

By Abigail W. Adams

Portland, Me., May 17 – The convertibles primary market was quiet early Wednesday after an overnight deal cleared the market the previous session.

Veeco Instruments Inc. priced an upsized $205 million of six-year convertible notes after the market close on Tuesday at par with a coupon of 2.875% and an initial conversion premium of 30%.

Pricing came toward the cheap end of talk for a coupon of 2.5% to 3% and at the cheap end of talk for an initial conversion premium of 30% to 35%.

The deal priced shortly after launching with books well oversubscribed, sources said.

The refinancing deal was “small and clubby,” a source said, with allocations going mostly to holders that participated in the exchange of the company’s outstanding notes.

Veeco entered into privately negotiated transactions with holders of its 3.5% convertible notes due 2025 to exchange $106 million in principal of the notes for $106 million in cash and 700,000 common shares.

The company also entered into privately negotiated transactions with holders of its 3.75% convertible notes due 2027 to exchange $100 million in principal of the notes for $92.8 million in cash and 3.8 million shares.

Veeco’s new 2.875% convertible notes due 2029 were quiet early in the session.

However, they made large gains on debut.

The notes shot up to 104 with stock off early in the session, a source said.

Veeco’s stock was changing hands at $21.85, a decrease of 2.8%, shortly before 11 a.m. ET.

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