Veeco agrees to exchange $106.4 million 4.125% convertibles for new notes

New York, April 16 - Veeco Instruments Inc. said it is has entered into agreements to exchange $106.4 million of its 4.125% convertible notes due 2008 for $105.5 million of new 4.125% convertible notes due April 15, 2012.

The transactions - which have been privately negotiated - will leave $37.6 million of the old notes still outstanding.

"This exchange of a portion of our currently outstanding subordinated notes for new notes will give Veeco more flexibility to utilize our cash flow from operations for the growth of our business," said John Rein, Jr., Veeco's executive vice president and chief financial officer, in a news release.

"Coupled with the retirement of $56 million of our convertible subordinated outstanding notes earlier this year, the exchange will significantly improve the company's capital structure."

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, 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.

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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