Applied Optoelectronics, Inc. (NASDAQ: AAOI) (“AOI”) announced
today that it has priced its private offering of $80.2 million
aggregate principal amount of 5.25% Convertible Senior Notes due
2026 (the “Notes”) in an offering exempt from the registration
requirements of the Securities Act of 1933, as amended (the
“Securities Act”). The size of the offering has increased from the
previously announced offering of $80 million aggregate principal
amount of Notes.
The sale of the Notes to the initial purchasers is expected to
settle on December 5, 2023, subject to customary closing
conditions, and is expected to result in approximately $76 million
in net proceeds to AOI. We intend to use the net proceeds from the
offering to repurchase or exchange our existing 5.00% Convertible
Senior Notes due 2024 (the “2024 notes”) in individual, privately
negotiated transactions with existing holders thereof, as described
below.
Concurrently with the offering, we expect to enter into
separate, privately negotiated transactions with certain holders of
our 2024 notes to exchange or repurchase approximately $80.2
million principal amount of the 2024 notes for aggregate
consideration consisting of approximately $81.1 million in cash,
which includes accrued interest on such 2024 notes, and
approximately 466,368 shares of our common stock. Following the
completion of the offering, we may engage in additional exchanges,
or we may repurchase or induce conversions, of the 2024 notes.
Holders of the 2024 notes that participate in any of these
exchanges, repurchases or induced conversions may purchase or sell
shares of our common stock in the open market to unwind any hedge
positions they may have with respect to the 2024 notes or to hedge
their exposure in connection with these transactions. These
activities may adversely affect the trading price of our common
stock and the Notes we are offering. Moreover, market activities by
holders of the 2024 notes that participate in the concurrent
exchanges or repurchases may have impacted the initial conversion
price of the Notes we are offering.
The Notes will be our senior, unsecured obligations and will be
equal in right of payment with our existing and future senior,
unsecured indebtedness, senior in right of payment to our existing
and future indebtedness that is expressly subordinated to the Notes
and effectively subordinated to our existing and future secured
indebtedness, to the extent of the value of the collateral securing
that indebtedness. The Notes will bear interest at a rate of 5.25%
per year, payable semiannually in arrears on June 15 and December
15 of each year, beginning on June 15, 2024. The Notes will mature
on December 15, 2026, unless earlier repurchased, redeemed or
converted.
The Notes will be convertible at the option of holders of the
Notes under certain specified circumstances, as set forth in the
indenture governing the Notes. We will settle conversions by paying
or delivering, as applicable, cash, shares of our common stock or a
combination of cash and shares of our common stock, at our
election, based on the applicable conversion rate(s). Initially,
the Notes will not be guaranteed, but the Notes will be fully and
unconditionally guaranteed, on a senior, unsecured basis, by
certain of our future domestic subsidiaries.
The initial conversion rate will be 65.6276 shares of our common
stock per $1,000 principal amount of Notes (representing an initial
conversion price of approximately $15.24 per share of our common
stock), subject to customary adjustments. If a Make-whole
fundamental change (as defined in the indenture governing the
Notes) occurs, and in connection with certain other conversions, we
will in certain circumstances increase the conversion rate for a
specified period of time.
Except in connection with the completion of the Specified
Divesture (as described below), we may not redeem the Notes prior
to December 15, 2024. On or after December 15, 2024, and on or
before the 40th scheduled trading day immediately before the
maturity date, we may redeem all or part of the Notes for cash if
the last reported sale price per share of our common stock exceeds
130% of the conversion price on (i) each of at least 20 trading
days, whether or not consecutive, during the 30 consecutive trading
days ending on, and including, the trading day immediately before
the date we send the related redemption notice; and (ii) the
trading day immediately before the date we send such redemption
notice at a cash redemption price equal to the principal amount of
the Notes to be redeemed, plus accrued and unpaid interest, if any.
Holders may require us to repurchase their Notes upon the
occurrence of a Fundamental change (as defined in the indenture
governing the Notes) at a cash purchase price equal to the
principal amount thereof plus accrued and unpaid interest, if any.
In addition, the Notes will be redeemable, in whole or in part, at
our option at any time, and from time to time, on or before the
40th scheduled trading day immediately before the maturity date, at
a cash redemption price equal to the principal amount of the Notes
to be redeemed, plus accrued and unpaid interest, if any, to, but
excluding, the redemption date (subject to the right of a holder of
notes as of the close of business on a record date to receive the
related interest payment on the corresponding interest payment
date), if the “Specified Divestiture” (as defined in the indenture
governing the Notes) is completed. If the Specified Divestiture is
completed, then each noteholder will have the right to require us
to repurchase its Notes for cash on a date of our choosing, which
must be a business day that is no more than 35, nor less than 20,
business days after we send the related notice of Specified
Divestiture. The redemption price will be equal to 100% of the
principal amount of the Notes to be redeemed, plus accrued and
unpaid interest, if any, to, but excluding, the redemption
date.
The offer and sale of the Notes and the shares of our common
stock issuable upon conversion of the Notes have not been
registered under the Securities Act, and the Notes and such shares
may not be offered or sold without registration or an applicable
exemption from the registration requirements of the Securities Act
and applicable state or other jurisdictions’ securities laws, or in
transactions not subject to those registration requirements.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy the Notes or any other securities,
nor shall there be any sale of the Notes or any other securities in
any state or jurisdiction in which such offer, solicitation or sale
would be unlawful. Any offer, if at all, will be made only pursuant
to Rule 144A under the Securities Act.
Forward-Looking Information
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. In some cases, you can identify forward-looking statements by
terminology such as “believe,” “may,” “estimate,” “continue,”
“anticipate,” “intend,” “should,” “could,” “would,” “target,”
“seek,” “aim,” “predicts,” “think,” “objectives,” “optimistic,”
“new,” “goal,” “strategy,” “potential,” “is likely,” “will,”
“expect,” “plan” “project,” “permit” or by other similar
expressions that convey uncertainty of future events or outcomes.
Such forward-looking statements reflect the views of management at
the time such statements are made. These forward-looking statements
involve risks and uncertainties, as well as assumptions and current
expectations, which could cause our actual results to differ
materially from those anticipated in such forward-looking
statements. These risks and uncertainties include but are not
limited to: the impact of the COVID-19 pandemic on our business and
financial results; reduction in the size or quantity of customer
orders; change in demand for our products due to industry
conditions; changes in manufacturing operations; volatility in
manufacturing costs; delays in shipments of products; disruptions
in the supply chain; change in the rate of design wins or the rate
of customer acceptance of new products; our reliance on a small
number of customers for a substantial portion of its revenues;
potential pricing pressure; a decline in demand for our customers’
products or their rate of deployment of their products; general
conditions in the internet datacenter, cable television (CATV)
broadband, telecom, or fiber-to-the-home (FTTH) markets; changes in
the world economy (particularly in the United States and China);
changes in the regulation and taxation of international trade,
including the imposition of tariffs; changes in currency exchange
rates; the negative effects of seasonality; and other risks and
uncertainties described more fully in our documents filed with or
furnished to the Securities and Exchange Commission, including our
Annual Report on Form 10-K for the year ended December 31, 2022 and
our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2023, June 30, 2023 and September 30, 2023. More information about
these and other risks that may impact our business are set forth in
the “Risk Factors” section of our quarterly and annual reports on
file with the Securities and Exchange Commission. You should not
rely on forward-looking statements as predictions of future events.
All forward-looking statements in this press release are based upon
information available to us as of the date hereof, and qualified in
their entirety by this cautionary statement. Except as required by
law, we assume no obligation to update forward-looking statements
for any reason after the date of this press release to conform
these statements to actual results or to changes in our
expectations.
About Applied Optoelectronics
Applied Optoelectronics Inc. (AOI) is a leading developer and
manufacturer of advanced optical products, including components,
modules and equipment. AOI’s products are the building blocks for
broadband fiber access networks around the world, where they are
used in the CATV broadband, internet datacenter, telecom and FTTH
markets. AOI supplies optical networking lasers, components and
equipment to tier-1 customers in all four of these markets. In
addition to its corporate headquarters, wafer fab and advanced
engineering and production facilities in Sugar Land, TX, AOI has
engineering and manufacturing facilities in Taipei, Taiwan and
Ningbo, China.
Investor Relations Contacts:
The Blueshirt Group, Investor RelationsLindsay
Savarese+1-212-331-8417ir@ao-inc.com
Cassidy
Fuller+1-415-217-4968 ir@ao-inc.com
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