How will Lumentum use the proceeds from the convertible note offering?

The company intends to use the net proceeds of approximately $442.5 million for general corporate purposes. This may include capital expenditures, such as expanding manufacturing capacity, and for general working capital needs.

What are the key terms of the convertible notes?

The notes bear interest at 0.250% annually, payable semi-annually, and mature on March 15, 2024. They are convertible into Lumentum's common stock at an initial rate of 16.4965 shares per $1,000 principal, equivalent to an initial conversion price of approximately $60.62 per share. Conversion is restricted prior to certain dates or stock price performance milestones, with provisions for make-whole fundamental changes.

What is the debt structure and ranking of these new notes?

The convertible notes are senior unsecured obligations of Lumentum Holdings Inc. They rank equally with all existing and future senior unsecured indebtedness. However, they are effectively subordinated to any secured indebtedness of the company (to the extent of the collateral value) and structurally subordinated to the liabilities of Lumentum's subsidiaries.

LITE 8-K: Material Agreements, Financial Events & More

Q: What is the primary purpose of this 8-K filing?

This 8-K filing reports on Lumentum Holdings Inc.'s entry into a material definitive agreement for the issuance of $450 million in aggregate principal amount of 0.250% Convertible Senior Notes due 2024. It details the terms of the purchase agreement and the indenture governing these notes.

Summary

Lumentum Holdings Inc. (LITE) filed an 8-K on March 8, 2017, to report on a significant financing event. The company entered into a purchase agreement to issue and sell $400 million in aggregate principal amount of 0.250% Convertible Senior Notes due 2024. This offering was conducted as a private placement to qualified institutional buyers under Rule 144A. The initial purchasers exercised their full over-allotment option, bringing the total issuance to $450 million. The net proceeds of approximately $442.5 million are intended for general corporate purposes, including potential capital expenditures for manufacturing capacity expansion and working capital. The convertible notes mature on March 15, 2024, and carry a low annual interest rate of 0.250%. The initial conversion rate is set at 16.4965 shares per $1,000 principal amount, implying a conversion price of approximately $60.62 per share. The indenture outlines specific conditions under which noteholders can convert their notes prior to maturity, primarily tied to the company's stock price performance and certain corporate events. The notes are senior unsecured obligations and rank equally with existing senior unsecured debt, but are effectively subordinated to secured debt and structurally subordinated to liabilities of subsidiaries.

Key Highlights

1Lumentum Holdings Inc. successfully issued $450 million in aggregate principal amount of 0.250% Convertible Senior Notes due 2024.
2The offering was a private placement to qualified institutional buyers under Rule 144A, with net proceeds of approximately $442.5 million.
3Proceeds are earmarked for general corporate purposes, including manufacturing capacity expansion and working capital.
4The notes carry a low annual interest rate of 0.250% and mature on March 15, 2024.
5The initial conversion price is approximately $60.62 per share, with conversion rights subject to specific stock price and event triggers.
6The notes are senior unsecured obligations, ranking equally with other senior unsecured debt.
7The company may satisfy conversion obligations in cash, shares, or a combination, subject to certain conditions.

Lumentum Holdings Inc. 8-K Report, Material Agreement (Mar 8, 2017)

Summary

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