Lumentum announces $1.1 billion convertible notes offering

Lumentum Holdings Inc. (NASDAQ: LITE) announced plans to offer $1.1 billion in convertible senior notes due 2032 through a private placement to qualified institutional buyers.

The San Jose-based optical and photonic products company said it expects to grant initial purchasers a 13-day option to purchase up to an additional $165 million in notes. The offering is subject to market conditions and other factors.

The notes will be senior, unsecured obligations with interest payable semi-annually. Holders may convert the notes into cash up to the principal amount, with any remainder convertible into cash, common stock, or a combination at Lumentum's discretion. The interest rate and conversion rate will be determined upon pricing.

Lumentum plans to use part of the proceeds to pay for capped call transactions and to repurchase a portion of its existing 0.50% Convertible Senior Notes due 2026 through privately negotiated transactions. The company intends to use remaining proceeds for general corporate purposes, including debt repayment, capital expenditures, working capital and potential acquisitions.

The company will enter into capped call transactions with initial purchasers and affiliates designed to reduce potential dilution from note conversions and offset cash payments exceeding the principal amount of converted notes.

Lumentum noted that counterparties may engage in derivative transactions and stock purchases to establish hedges, which could affect the stock price and notes pricing. Similar activities may continue throughout the notes' life and could influence conversion ability and consideration received upon conversion.

The notes will be offered under Rule 144A and have not been registered under the Securities Act of 1933.

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