Veeco agrees to exchange $12.4 million additional 4.125% convertibles for new notes

By Angela McDaniels

Seattle, April 26 - Veeco Instruments Inc. said it has entered into agreements to exchange $12.4 million of its 4.125% convertible notes due 2008 for $12.3 million of new 4.125% convertible notes due April 15, 2012.

Following the exchange, $25.2 million of the old notes and $117.8 million of the new notes will be outstanding.

The transactions - which have been privately negotiated and are expected on close on May 1 - are being made under the same terms as the exchange agreements announced by the company on April 16. Under those agreements, the company exchanged $106.4 million of the old notes for $105.5 million of the new notes.

The new notes have net share settlement, giving Veeco the option to pay conversions in cash up to the principal amount and stock after that.

The new notes mature on April 15, 2012 versus Dec. 21, 2008 for the existing notes and have a conversion ratio of 36.7277 shares per $1,000 principal amount for a conversion price of $27.23, or a 38% premium over the April 16 close. The notes have a contingent conversion trigger at 130% and holders may also convert from Jan. 15, 2012 through two day before April 15, 2012.

"These exchange transactions, combined with the retirement of $56.0 million of outstanding notes earlier this year, significantly improves Veeco's capital structure. We have reduced our debt outstanding by 27%, extended the term of the majority of our notes, and improved the company's balance sheet," John Rein, Jr., Veeco's executive vice president and chief financial officer, said in a news release.

Veeco Instruments is based in Woodbury, N.Y., and provides products and services for nanoscale applications in the semiconductor, data storage, HB-LED/wireless and scientific research markets.

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