Infinera (NASDAQ: INFN), provider of Intelligent Transport
Networks, announced today the pricing of $350 million aggregate
principal amount of convertible senior notes due 2024 in an
underwritten registered public offering. The offering was upsized
from an originally announced $275 million in aggregate principal
amount. Infinera expects the offering of notes to close on
September 11, 2018, subject to customary closing conditions.
Infinera also granted the underwriter of the notes a 30-day option
to purchase up to an additional $52.5 million in aggregate
principal amount of notes to cover over-allotments, if any.
In connection with the pricing of the notes, Infinera entered
into capped call transactions in order to reduce or offset the
potential dilution to Infinera’s common stock upon conversion of
the notes to equity and/or offset any cash payments Infinera is
required to make in excess of the principal amount of converted
notes, as the case may be, with such reduction and/or offset
subject to a cap. The cap price of the capped call transactions is
initially $15.19 per share of Infinera’s common stock, which
represents a premium of 100% to the $7.595 per share closing price
of Infinera’s common stock on September 6, 2018.
Terms of the Notes and Capped Calls:The notes
will be general unsecured obligations of Infinera, and interest
will be payable semiannually in arrears at a rate of 2.125% per
year on March 1 and September 1 of each year, beginning on March 1,
2019. The notes will mature on September 1, 2024, unless
repurchased, redeemed or converted in accordance with their terms
prior to such date. The initial conversion rate is 101.2812 shares
of Infinera’s common stock per $1,000 principal amount of notes
(equivalent to an initial conversion price of approximately $9.87
per share of Infinera’s common stock). Upon conversion, Infinera
will pay or deliver, as the case may be, cash, shares of common
stock of Infinera or a combination of cash and shares of common
stock of Infinera, at its election. Prior to June 1, 2024, the
notes will be convertible at the option of holders only upon
satisfaction of certain conditions and during certain periods.
Thereafter, the notes will be convertible at the option of holders
at any time until the close of business on the second scheduled
trading day immediately preceding the maturity date.
Infinera may redeem for cash all, but not less than all, of the
notes, at its option, on or after September 5, 2021 if the last
reported sale price of Infinera’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 Infinera provides 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 to, but excluding, the
redemption date. In addition, if Infinera’s previously announced
acquisition of Coriant (the "Coriant Acquisition") is not
consummated prior to January 23, 2019, or if the related purchase
agreement is terminated for any reason other than the consummation
of the Coriant Acquisition, Infinera may redeem all, but not less
than all, of the notes at a redemption price equal to 102% of their
principal amount, plus accrued and unpaid interest to, but
excluding, the redemption date, plus 75% of the excess, if any, of
the notes’ conversion value at the time of redemption over their
initial conversion value.
Holders of the notes will have the right to require Infinera to
repurchase for cash all or a portion of their notes at 100% of
their principal amount, plus any accrued and unpaid interest, upon
the occurrence of a fundamental change (as defined in the indenture
relating to the notes). Infinera, under certain circumstances, will
also be required to increase the conversion rate for holders who
convert their notes in connection with certain fundamental changes
occurring prior to the maturity date or following Infinera's
issuance of a notice of an optional redemption.
Infinera intends to use a portion of the net proceeds from the
offering to pay the cost of the capped call transactions. Infinera
also intends to use a portion of the net proceeds to pay the
purchase price of its previously-announced Coriant Acquisition,
including fees and expenses relating thereto, and the remainder of
the net proceeds for working capital and other general corporate
purposes. The offering of the notes is not contingent on the
consummation of the Coriant Acquisition.
Morgan Stanley & Co. LLC is acting as sole book-running
manager for the offering.
In connection with the pricing of the notes, Infinera entered
into capped call transactions with one or more of the underwriter
or its affiliates and/or other financial institutions (the option
counterparties). The capped call transactions are expected
generally to reduce or offset the potential dilution to Infinera’s
common stock upon any conversion of the notes and/or offset any
cash payments Infinera is required to make in excess of the
principal amount of converted notes, as the case may be, with such
reduction and/or offset subject to a cap. If the underwriter
exercises its option to purchase additional notes, Infinera expects
to enter into additional capped call transactions with the option
counterparties. The cap price of the capped call transactions is
initially $15.19 per share of Infinera’s common stock, which
represents a premium of 100% to the $7.595 per share closing price
of Infinera’s common stock on September 6, 2018 and is subject to
certain adjustments under the terms of the capped call
transactions.
Infinera expects that, in connection with establishing their
initial hedges of the capped call transactions, the option
counterparties or their respective affiliates may enter into
various derivative transactions with respect to Infinera’s common
stock concurrently with or shortly after the pricing of the notes.
This activity could increase (or reduce the size of any decrease
in) the market price of Infinera’s common stock or the notes at
that time.
In addition, Infinera expects that the option counterparties or
their respective affiliates may modify their hedge positions by
entering into or unwinding various derivatives with respect to
Infinera’s common stock and/or purchasing or selling Infinera’s
common stock or other securities of Infinera in secondary market
transactions following the pricing of the notes and prior to the
maturity of the notes (and are likely to do so during any
observation period related to a conversion of notes). This activity
could also cause or avoid an increase or a decrease in the market
price of Infinera’s common stock or the notes, which could affect
the ability of a noteholder to convert its notes and, to the extent
the activity occurs during any observation period related to a
conversion of notes, could affect the number of shares and value of
the consideration that a noteholder will receive upon conversion of
its notes.
The offering of the notes is being made pursuant to an effective
registration statement on Form S-3 (including a prospectus) filed
with the Securities and Exchange Commission on September 5, 2018.
Before you invest, you should read the prospectus forming a part of
that registration statement and the preliminary prospectus
supplement related to the offering and the other documents that
Infinera has filed with the SEC for more complete information about
Infinera and this offering. These documents are available at no
charge by visiting EDGAR on the SEC website at www.sec.gov.
Alternatively, copies of the prospectus supplement related to the
offering, when available, and the accompanying prospectus may be
obtained from Morgan Stanley & Co. LLC, Attn: Prospectus
Department, 180 Varick Street, Second Floor, New York, NY 10014, or
by telephone at (866) 718-1649 or email:
prospectus@morganstanley.com.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any sale of
these securities in any 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 jurisdiction.
The offering of these securities will be made only by means of a
prospectus supplement and the related prospectus. The securities
being offered have not been approved or disapproved by any
regulatory authority, nor has any such authority passed upon the
accuracy or adequacy of the registration statement, the prospectus
contained therein or the prospectus supplement.
Contacts:
Media: Anna VueTel. +1 (916) 595-8157avue@infinera.com
Investors:Jeff HustisTel: + 1 (408)
213-7150jhustis@infinera.com
About Infinera
Infinera provides Intelligent Transport Networks, enabling
carriers, cloud operators, governments and enterprises to scale
network bandwidth, accelerate service innovation and automate
optical network operations. Infinera’s end-to-end packet-optical
portfolio is designed for long-haul, subsea, data center
interconnect and metro applications.
Infinera and the Infinera logo are registered trademarks of
Infinera Corporation.
Forward-Looking StatementsThis press release
contains certain forward-looking statements based on current
expectations, forecasts and assumptions that involve risks and
uncertainties. Such forward-looking statements include, without
limitation, the completion of the offering and capped call
transactions and the anticipated use of proceeds from the offering.
Forward-looking statements can also be identified by
forward-looking words such as “anticipate,” “believe,” “could,”
“estimate,” “expect,” “intend,” “may,” “should,” “will,” and
“would” or similar words. These statements are based on information
available to Infinera as of the date hereof and actual results
could differ materially from those stated or implied due to risks
and uncertainties. More information on potential factors that may
impact Infinera’s business are set forth in its registration
statement on Form S-3 on file with the Securities and Exchange
Commission and the prospectus and prospectus supplement included or
incorporated by reference therein, as well as subsequent documents
and reports filed with or furnished to the Securities and Exchange
Commission from time to time. These reports are available on the
Securities and Exchange Commission’s website at www.sec.gov.
Infinera assumes no obligation to, and does not currently intend
to, update any such forward-looking statements.
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