Ultra Clean upsizes $525M convertible note offering, authorizes $40M share buyback
Ultra Clean upsized its convertible note offering from $400 million to $525 million, pricing 0.00% notes due 2031 with a $75 million overallotment option. It expects $511.1 million net proceeds to fund $21.9 million capped calls, repurchase 672,608 shares for $40 million and support corporate needs.
1. Offering Upsized to $525M Convertible Notes
Ultra Clean Holdings priced $525.0 million aggregate principal of 0.00% convertible senior notes due March 15, 2031, raising the size from the previously announced $400.0 million and granting initial purchasers a $75.0 million overallotment option. The issuance is set to settle on March 3, 2026, subject to customary closing conditions.
2. Net Proceeds Allocation
The company estimates net proceeds of approximately $511.1 million, or $584.2 million if the full overallotment is exercised, after discounts and commissions. Approximately $21.9 million will fund capped call transactions, $40.0 million will repurchase 672,608 shares of common stock, and the balance will serve working capital needs and prepayment of term loan obligations.
3. Conversion Terms and Premium
Notes convert at an initial rate of 11.8001 shares per $1,000 principal, equivalent to an $84.75 conversion price, representing a 42.5% premium over the $59.47 recent share price. Conversion rights are triggered by specified events, with full elective conversion available from December 16, 2030, until two trading days before maturity.
4. Capped Call Structure
Ultra Clean entered capped call transactions covering the shares underlying the notes, setting an initial cap price of $104.0725 per share, a 75.0% premium over recent market levels. These transactions aim to reduce dilution on conversion or offset cash payments above principal, subject to anti-dilution adjustments.