Advanced Energy Industries, Inc. (Nasdaq: AEIS), a global leader
in highly engineered, precision power conversion, measurement, and
control solutions, announced today the pricing of its private
offering of $500 million aggregate principal amount of 2.50%
Convertible Senior Notes due 2028 (the “notes”) at a premium of
approximately 30% over the closing price of Advanced Energy’s
common stock of $105.74 per share on September 7, 2023. The notes
were offered only to persons reasonably believed to be qualified
institutional buyers in accordance with Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). Advanced
Energy has granted to the initial purchasers of the notes an option
to purchase, within a 13-day period beginning on, and including,
the date on which the notes are first issued, up to an additional
$75 million aggregate principal amount of the notes. The offering
of the notes and the convertible hedge and warrant transactions
described below are expected to close on September 12, 2023,
subject to customary closing conditions.
Advanced Energy expects the net proceeds from the offering of
the notes to be approximately $487.9 million ($561.2 million if the
initial purchasers exercise their option to purchase the additional
notes in full) after deducting the initial purchasers’ discounts
and after deducting offering expenses payable by Advanced Energy.
Advanced Energy intends to use the net proceeds from the offering
for one or more of the following: (i) to fund plans for future
growth, which may include strategic acquisitions, (ii) to
opportunistically repay existing outstanding indebtedness, (iii) to
repurchase additional common stock as part of our existing
opportunistic share repurchase plan, or (iv) for general corporate
purposes.
In addition, Advanced Energy intends to use the net proceeds
from the offering (i) to enter into convertible note hedge
transactions with one or more of the initial purchasers and/or
their respective affiliates and/or other financial institutions
(the “option counterparties”) (after such cost is partially offset
by the proceeds to us from the sale by us of the warrant
transactions to the option counterparties as described below), and
(ii) to repurchase $40.0 million of Advanced Energy common stock,
which was authorized by Advanced Energy’s board of directors,
concurrently with this offering in privately negotiated
transactions through one of the initial purchasers or its affiliate
from purchasers of the notes in the offering. In connection with
this offering, Advanced Energy repurchased approximately $40.0
million of its common stock, representing 378,286 shares of its
common stock from purchasers of the notes in this offering. Such
repurchases could affect the market price of Advanced Energy’s
common stock concurrently with, or shortly after, the pricing of
the notes, and could result in a higher effective conversion price
for the notes. If the initial purchasers exercise their option to
purchase additional notes, Advanced Energy expects to enter into
additional convertible note hedge transactions and warrant
transactions, and intends to use a portion of the net proceeds from
the sale of any such additional notes to pay the costs of such
additional convertible note hedge transactions (which would be
partially offset by the proceeds to Advanced Energy from the sale
of additional warrant transactions).
The notes will be Advanced Energy’s senior unsecured obligations
and will rank senior in right of payment to any of its indebtedness
that is expressly subordinated in right of payment to the notes;
equal in right of payment to any of its indebtedness that is not so
subordinated; effectively junior in right of payment to any of its
secured indebtedness to the extent of the value of the assets
securing such indebtedness; and structurally junior to all
indebtedness and other liabilities (including trade payables) of
its subsidiaries. The notes will bear interest at a rate of 2.50%
per year, payable semiannually in arrears on March 15 and September
15 of each year, beginning on March 15, 2024. The notes will mature
on September 15, 2028, unless earlier repurchased, redeemed or
converted. The initial conversion rate is 7.2747 shares of common
stock per $1,000 principal amount of notes, which is equivalent to
an initial conversion price of approximately $137.46 per share,
representing a premium of approximately 30% over the closing price
of the common stock of $105.74 per share on September 7, 2023.
Advanced Energy will satisfy any conversion elections by paying
cash up to the aggregate principal amount of the notes to be
converted, and paying or delivering, as the case may be, cash,
shares of common stock or a combination of cash and shares of
common stock, at Advanced Energy’s election, in respect of the
remainder, if any, of its conversion obligation in excess of the
aggregate principal amount of the notes to be converted.
Advanced Energy may redeem for cash all or any portion of the
notes, at its option at any time and from time to time, on or after
September 20, 2026 if the last reported sale price of Advanced
Energy’s common stock has been at least 130% of the conversion
price then in effect for at least 20 trading days (whether or not
consecutive) during any 30 consecutive trading-day period
(including the last trading day of such period) ending on, and
including, the trading day immediately preceding the date on which
Advanced Energy provides the related notice of redemption at a
redemption price 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. No sinking fund is provided for the
notes. If Advanced Energy undergoes a fundamental change (as
defined in the indenture governing the notes), holders may require
Advanced Energy to repurchase for cash all or part of their notes
at a repurchase price equal to 100% of the principal amount of the
notes to be repurchased, plus accrued and unpaid interest, if any,
to, but excluding, the fundamental change repurchase date.
In connection with the pricing of the notes, Advanced Energy has
entered into privately negotiated convertible note hedge
transactions with the option counterparties. The convertible note
hedge transactions will cover, subject to customary anti-dilution
adjustments, the same number of shares of common stock that
initially underlie the notes. Advanced Energy also has entered into
warrant transactions with the option counterparties relating to the
same number of shares of common stock, subject to customary
anti-dilution adjustments. The convertible note hedge transactions
are expected generally to reduce potential dilution to Advanced
Energy’s common stock upon any conversion of notes and/or offset
any cash payments Advanced Energy is required to make in excess of
the principal amount of converted notes, as the case may be.
However, the warrant transactions could separately have a dilutive
effect to the extent that the market value per share of Advanced
Energy’s common stock exceeds the strike price of the warrants. The
strike price of the warrant transactions will initially be
approximately $179.76 per share, which represents a premium of 70%
over the closing price of Advanced Energy’s common stock of $105.74
per share on September 7, 2023 and is subject to certain
adjustments under the terms of the warrant transactions.
In connection with establishing their initial hedges of the
convertible note hedge and warrant transactions, the option
counterparties, or their respective affiliates, expect to purchase
shares of the common stock and/or enter into various derivative
transactions with respect to the common stock concurrently with or
shortly after the pricing of the notes. These activities could have
the effect of increasing, or reducing the size of any decline in,
the market price of the common stock or the notes at that time. In
addition, the option counterparties, or their respective
affiliates, may modify their hedge positions by entering into or
unwinding various derivative transactions with respect to the
common stock and/or by purchasing or selling the common stock or
other securities of Advanced Energy in secondary market
transactions prior to the maturity of the notes, and are likely to
do so during any observation period related to a conversion of
notes. The effect, if any, of these activities on the market price
of the common stock or the notes will depend in part on market
conditions and cannot be ascertained at this time, but any of these
activities could cause or prevent an increase or decline in the
market price of the common stock or the notes, which could affect
holders’ ability to convert the notes and, to the extent the
activity occurs during any observation period related to a
conversion of notes, it could affect the number and value of shares
of the common stock, if any, that holders will receive upon
conversion of the notes.
The notes and any shares of the common stock issuable upon
conversion of the notes have not been registered under the
Securities Act or under any U.S. state securities laws or in any
other jurisdiction and may not be offered or sold in the United
States absent registration or an applicable exemption from
registration requirements.
This press release is neither an offer to sell nor a
solicitation of an offer to buy any of these securities nor shall
there be any sale of these securities in any state or jurisdiction
in which such an offer, solicitation or sale would be unlawful
prior to the registration or qualification under the securities
laws of any such state or jurisdiction.
About Advanced Energy
Advanced Energy (Nasdaq: AEIS) is a global leader in the design
and manufacture of highly engineered, precision power conversion,
measurement and control solutions for mission-critical applications
and processes. Advanced Energy’s power solutions enable customer
innovation in complex applications for a wide range of industries
including semiconductor equipment, industrial production, medical
and life sciences, data center computing, networking and
telecommunications. With engineering know-how and responsive
service and support for customers around the globe, the company
builds collaborative partnerships to meet technology advances,
propels growth of its customers and innovates the future of power.
Advanced Energy has devoted four decades to perfecting power. It is
headquartered in Denver, Colorado, USA.
Advanced Energy | Precision. Power. Performance. Trust.
Forward-Looking Statements
This release may contain, in addition to historical information,
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Statements in this
report that are not historical information are forward-looking
statements. For example, statements relating to our beliefs,
expectations and plans, particularly statements about the expected
closing of the transactions, the extent, and potential effects, of
convertible note hedge and warrant transactions, the potential
dilution to the common stock, the conversion price for the notes,
and the expected use of the proceeds from the sale of the notes,
are forward-looking statements. The inclusion of words such as
"anticipate," "expect," "estimate," "can," "may," "might,"
"continue," "enables," "plan," "intend," "should," "could,"
"would," "likely," "potential," or "believe," as well as statements
that events or circumstances "will" occur or continue, indicate
forward-looking statements. Forward-looking statements are subject
to known and unknown risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
by such statements. Such risks and uncertainties are described in
Advanced Energy’s Form 10-K, Forms 10-Q and other reports and
statements filed with the Securities and Exchange Commission (the
“SEC”). These reports and statements are available on the SEC’s
website at www.sec.gov. Copies may also be obtained from Advanced
Energy’s investor relations page at ir.advancedenergy.com or by
contacting Advanced Energy’s investor relations at 970-407-6555.
Forward-looking statements are made and based on information
available to us on the date of this press release, and readers are
cautioned to not place undue reliance on forward-looking
statements. We assume no obligation to update the information in
this press release.
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version on businesswire.com: https://www.businesswire.com/news/home/20230908720710/en/
Andrew Huang Advanced Energy Industries, Inc. 970-407-6555
ir@aei.com
Advanced Energy Industries (NASDAQ:AEIS)
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