ADTRAN proposes $150 million convertible senior notes offering

ADTRAN Holdings Inc. (NASDAQ: ADTN) announced plans to offer $150 million in convertible senior notes due 2030 through a private placement to qualified institutional buyers. The telecommunications equipment company also expects to grant the initial purchaser an option to buy an additional $22.5 million in notes.

The notes will be senior, unsecured obligations that accrue interest payable semi-annually and mature on September 15, 2030. Noteholders can convert their notes under certain circumstances and during specified periods. ADTRAN will settle conversions by paying cash up to the principal amount and may deliver cash, common stock, or a combination for any remainder.

The company can redeem the notes for cash starting September 20, 2028, if its common stock price exceeds 130% of the conversion price for a specified period and other conditions are met. The redemption price equals the principal amount plus accrued interest.

ADTRAN intends to use part of the net proceeds to fund capped call transactions and the remainder to repay borrowings under its July 2022 credit agreement. The capped call transactions are designed to reduce potential dilution from note conversions and offset cash payments exceeding the principal amount of converted notes.

The company expects option counterparties to hedge their positions by entering derivative transactions or purchasing ADTRAN common stock around the pricing date. This activity could affect the market price of both the company's stock and the notes.

The offering has not been registered under the Securities Act of 1933 and will be conducted under exemptions from registration requirements, according to the company's statement.

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