Adtran Holdings, Inc. (ADTN), a fiber networking and telecommunications company, on Wednesday announced that announced the pricing of its private offering of $175.0 million aggregate principal amount of 3.75% convertible senior notes due 2030.
The offering was upsized from $150.0 million, with settlement expected on September 19.
The initial purchasers were granted a 13-day option to buy up to an additional $26.25 million principal amount of notes.
The notes will be senior unsecured obligations of the company, bearing interest at 3.75% per annum, payable semi-annually on March 15 and September 15, starting March 15, 2026. The notes will mature on September 15, 2030, unless earlier repurchased, redeemed, or converted.
The initial conversion rate is 86.8206 shares per $1,000 principal amount of notes, equivalent to an initial conversion price of about $11.52 per share, a 30% premium to the September 16 closing price of $8.86.
The notes will be redeemable at the company's option on or after September 20, 2028, if certain conditions are met. Holders will also have repurchase rights upon a fundamental change.
Net proceeds are estimated at $168.1 million, or $193.4 million if the option is fully exercised. The company plans to use about $15.3 million to fund capped call transactions designed to reduce dilution upon conversion.
The remaining proceeds will be used to repay about $152.8 million of borrowings under Adtran, Inc.'s Wells Fargo Credit Agreement and to cover related fees and expenses.
Additional proceeds from the option exercise would fund more capped call transactions, further debt repayment, and collateralization of obligations under the credit agreement.
The capped call transactions have an initial cap price of about $15.51 per share, representing a 75% premium to the September 16 closing price.
On Tuesday, Adtran closed trading 0.68% higher at $8.92 on the Nasdaq.
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