Veeco Instruments to exchange some 2.7% convertibles due 2023 for 3.5% convertibles due 2025

By Taylor Fox

New York, Nov. 12 – Veeco Instruments Inc. entered into a privately negotiated exchange agreement in which it will retire $125 million of its outstanding 2.7% convertible senior notes due 2023 in exchange for the issuance of $132.5 million of new 3.5% convertible senior exchange notes due Jan. 15, 2025 and a cash payment to the holder of $1.1 million, according to a news release.

Following the exchange, $131.7 million of the original notes will remain outstanding with the terms unchanged.

The new notes have an initial conversion rate of 41.6667 shares of Veeco’s common stock per $1,000 of new notes, equivalent to a conversion price of $24.00 per share, subject to adjustment in certain events. The initial conversion price represents a 58.6% premium over the closing sale price of Veeco’s common stock on Nov. 11.

Conversions of the new notes will be settled in cash, shares of Veeco’s common stock or a combination thereof.

The holder of the new notes may convert all or a portion of its notes at its option at any time prior to the close of business on the business day immediately preceding Oct. 15, 2024, only upon the satisfaction of certain conditions and during certain time periods.

On or after Oct. 15, 2024 until the close of business on the second scheduled trading day immediately preceding Jan. 15, 2025, the holder may convert its new notes at any time, without condition.

Veeco may be required to repurchase the new notes for cash at par, plus interest. In addition, upon the occurrence of certain corporate events, the conversion rate on the new notes will increase.

The new notes will not be redeemable by Veeco prior to Jan. 15, 2023.

On or after Jan. 15, 2023, Veeco may redeem for cash all or any portion of the new notes if the last reported sale price of common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the redemption date.

Veeco anticipates that the closing of the exchange transaction will occur on or about Nov. 17, subject to customary closing conditions.

Veeco Instruments is a Plainview, N.Y.-based manufacturer of semiconductor process equipment.

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