Ciena plans $2 billion convertible notes offering

Ciena Corporation (NYSE: CIEN) announced it intends to offer $2.0 billion in convertible senior notes due 2031 through a private placement to qualified institutional buyers.

The networking equipment company will grant initial purchasers an option to buy an additional $300 million of the notes within 13 days of the initial closing. The notes will be guaranteed by Ciena's wholly-owned domestic subsidiaries that currently guarantee its existing 4.00% senior notes due 2030.

Ciena plans to use proceeds to repurchase up to $140 million of its common stock concurrently with the offering's pricing through privately negotiated transactions. The company will allocate approximately $1.14 billion to repay outstanding amounts under its existing term loan facility and related fees. Remaining proceeds will fund general corporate purposes, including supply chain capacity investments.

The notes mature September 15, 2031, and will be convertible under specific conditions before June 15, 2031, then freely convertible until two trading days before maturity. Ciena may satisfy conversions with cash up to the principal amount, then cash, stock, or a combination for any excess conversion obligation.

The company cannot redeem the notes before September 20, 2029, except for cleanup redemptions when less than 10% of the original principal remains outstanding. After September 20, 2029, Ciena may redeem the notes in whole or part under certain conditions.

Ciena expects to enter convertible note hedge transactions with initial purchasers or affiliates to reduce potential dilution from the notes. The company will simultaneously execute warrant transactions related to the same number of shares, which could have dilutive effects if Ciena's stock price exceeds the warrant strike price.

The offering is being conducted under Rule 144A of the Securities Act of 1933 and has not been registered with the Securities and Exchange Commission.

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